Correlation Between Western Asset and Pimco Rae
Can any of the company-specific risk be diversified away by investing in both Western Asset and Pimco Rae 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 Western Asset and Pimco Rae into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Inflation and Pimco Rae Worldwide, you can compare the effects of market volatilities on Western Asset and Pimco Rae 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 Western Asset with a short position of Pimco Rae. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Pimco Rae.
Diversification Opportunities for Western Asset and Pimco Rae
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Western and Pimco is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Inflation and Pimco Rae Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Rae Worldwide and Western Asset 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 Western Asset Inflation are associated (or correlated) with Pimco Rae. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Rae Worldwide has no effect on the direction of Western Asset i.e., Western Asset and Pimco Rae go up and down completely randomly.
Pair Corralation between Western Asset and Pimco Rae
Assuming the 90 days horizon Western Asset is expected to generate 1.16 times less return on investment than Pimco Rae. But when comparing it to its historical volatility, Western Asset Inflation is 1.48 times less risky than Pimco Rae. It trades about 0.33 of its potential returns per unit of risk. Pimco Rae Worldwide is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 763.00 in Pimco Rae Worldwide on December 1, 2024 and sell it today you would earn a total of 18.00 from holding Pimco Rae Worldwide or generate 2.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Inflation vs. Pimco Rae Worldwide
Performance |
| Timeline |
| Western Asset Inflation |
| Pimco Rae Worldwide |
Western Asset and Pimco Rae Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Pimco Rae
The main advantage of trading using opposite Western Asset and Pimco Rae positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Pimco Rae 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 Rae will offset losses from the drop in Pimco Rae's long position.| Western Asset vs. T Rowe Price | Western Asset vs. Prudential Emerging Markets | Western Asset vs. First American Funds | Western Asset vs. Tiaa Cref Funds |
| Pimco Rae vs. Us Government Securities | Pimco Rae vs. Bbh Intermediate Municipal | Pimco Rae vs. Prudential California Muni | Pimco Rae vs. Inverse Government Long |
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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