Correlation Between Inverse Emerging and Pimco Stocksplus
Can any of the company-specific risk be diversified away by investing in both Inverse Emerging and Pimco Stocksplus at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Inverse Emerging and Pimco Stocksplus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inverse Emerging Markets and Pimco Stocksplus Short, you can compare the effects of market volatilities on Inverse Emerging and Pimco Stocksplus and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Inverse Emerging with a short position of Pimco Stocksplus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inverse Emerging and Pimco Stocksplus.
Diversification Opportunities for Inverse Emerging and Pimco Stocksplus
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Inverse and Pimco is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Inverse Emerging Markets and Pimco Stocksplus Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Stocksplus Short and Inverse Emerging is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Inverse Emerging Markets are associated (or correlated) with Pimco Stocksplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Stocksplus Short has no effect on the direction of Inverse Emerging i.e., Inverse Emerging and Pimco Stocksplus go up and down completely randomly.
Pair Corralation between Inverse Emerging and Pimco Stocksplus
Assuming the 90 days horizon Inverse Emerging Markets is expected to generate 3.12 times more return on investment than Pimco Stocksplus. However, Inverse Emerging is 3.12 times more volatile than Pimco Stocksplus Short. It trades about -0.02 of its potential returns per unit of risk. Pimco Stocksplus Short is currently generating about -0.06 per unit of risk. If you would invest 1,227 in Inverse Emerging Markets on October 9, 2024 and sell it today you would lose (365.00) from holding Inverse Emerging Markets or give up 29.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inverse Emerging Markets vs. Pimco Stocksplus Short
Performance |
| Timeline |
| Inverse Emerging Markets |
| Pimco Stocksplus Short |
Inverse Emerging and Pimco Stocksplus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inverse Emerging and Pimco Stocksplus
The main advantage of trading using opposite Inverse Emerging and Pimco Stocksplus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inverse Emerging position performs unexpectedly, Pimco Stocksplus can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Pimco Stocksplus will offset losses from the drop in Pimco Stocksplus' long position.| Inverse Emerging vs. Basic Materials Fund | Inverse Emerging vs. Basic Materials Fund | Inverse Emerging vs. Banking Fund Class | Inverse Emerging vs. Basic Materials Fund |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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