Correlation Between Small Cap and Pimco Total
Can any of the company-specific risk be diversified away by investing in both Small Cap and Pimco Total 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 Small Cap and Pimco Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Stock and Pimco Total Return, you can compare the effects of market volatilities on Small Cap and Pimco Total 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 Small Cap with a short position of Pimco Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Pimco Total.
Diversification Opportunities for Small Cap and Pimco Total
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Small and Pimco is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Stock and Pimco Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Total Return and Small Cap 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 Small Cap Stock are associated (or correlated) with Pimco Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Total Return has no effect on the direction of Small Cap i.e., Small Cap and Pimco Total go up and down completely randomly.
Pair Corralation between Small Cap and Pimco Total
Assuming the 90 days horizon Small Cap Stock is expected to under-perform the Pimco Total. In addition to that, Small Cap is 3.2 times more volatile than Pimco Total Return. It trades about -0.09 of its total potential returns per unit of risk. Pimco Total Return is currently generating about 0.13 per unit of volatility. If you would invest 859.00 in Pimco Total Return on September 12, 2024 and sell it today you would earn a total of 7.00 from holding Pimco Total Return or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Stock vs. Pimco Total Return
Performance |
| Timeline |
| Small Cap Stock |
| Pimco Total Return |
Small Cap and Pimco Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Pimco Total
The main advantage of trading using opposite Small Cap and Pimco Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Pimco Total 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 Total will offset losses from the drop in Pimco Total's long position.| Small Cap vs. Shelton Emerging Markets | Small Cap vs. Kinetics Market Opportunities | Small Cap vs. Siit Emerging Markets | Small Cap vs. Investec Emerging Markets |
| Pimco Total vs. Columbia Global Technology | Pimco Total vs. Science Technology Fund | Pimco Total vs. Fidelity Advisor Technology | Pimco Total vs. Towpath Technology |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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