Correlation Between PIMCO 1 and JPMorgan Inflation
Can any of the company-specific risk be diversified away by investing in both PIMCO 1 and JPMorgan Inflation 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 PIMCO 1 and JPMorgan Inflation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PIMCO 1 5 Year and JPMorgan Inflation Managed, you can compare the effects of market volatilities on PIMCO 1 and JPMorgan Inflation 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 PIMCO 1 with a short position of JPMorgan Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO 1 and JPMorgan Inflation.
Diversification Opportunities for PIMCO 1 and JPMorgan Inflation
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PIMCO and JPMorgan is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO 1 5 Year and JPMorgan Inflation Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Inflation and PIMCO 1 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 PIMCO 1 5 Year are associated (or correlated) with JPMorgan Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Inflation has no effect on the direction of PIMCO 1 i.e., PIMCO 1 and JPMorgan Inflation go up and down completely randomly.
Pair Corralation between PIMCO 1 and JPMorgan Inflation
Given the investment horizon of 90 days PIMCO 1 5 Year is expected to generate 0.54 times more return on investment than JPMorgan Inflation. However, PIMCO 1 5 Year is 1.87 times less risky than JPMorgan Inflation. It trades about 0.13 of its potential returns per unit of risk. JPMorgan Inflation Managed is currently generating about 0.04 per unit of risk. If you would invest 5,232 in PIMCO 1 5 Year on August 29, 2024 and sell it today you would earn a total of 16.00 from holding PIMCO 1 5 Year or generate 0.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PIMCO 1 5 Year vs. JPMorgan Inflation Managed
Performance |
| Timeline |
| PIMCO 1 5 |
| JPMorgan Inflation |
PIMCO 1 and JPMorgan Inflation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIMCO 1 and JPMorgan Inflation
The main advantage of trading using opposite PIMCO 1 and JPMorgan Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO 1 position performs unexpectedly, JPMorgan Inflation 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 JPMorgan Inflation will offset losses from the drop in JPMorgan Inflation's long position.| PIMCO 1 vs. PIMCO Broad TIPS | PIMCO 1 vs. PIMCO 15 Year | PIMCO 1 vs. SPDR FTSE International | PIMCO 1 vs. FlexShares iBoxx 3 Year |
| JPMorgan Inflation vs. Dimensional ETF Trust | JPMorgan Inflation vs. JPMorgan Short Duration | JPMorgan Inflation vs. Goldman Sachs Access | JPMorgan Inflation vs. SPDR Bloomberg 1 10 |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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