Correlation Between Stellar and Pimco Emerging
Can any of the company-specific risk be diversified away by investing in both Stellar and Pimco Emerging 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 Stellar and Pimco Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stellar and Pimco Emerging Local, you can compare the effects of market volatilities on Stellar and Pimco Emerging 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 Stellar with a short position of Pimco Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellar and Pimco Emerging.
Diversification Opportunities for Stellar and Pimco Emerging
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Stellar and Pimco is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and Pimco Emerging Local in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Emerging Local and Stellar 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 Stellar are associated (or correlated) with Pimco Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Emerging Local has no effect on the direction of Stellar i.e., Stellar and Pimco Emerging go up and down completely randomly.
Pair Corralation between Stellar and Pimco Emerging
Assuming the 90 days trading horizon Stellar is expected to generate 27.4 times more return on investment than Pimco Emerging. However, Stellar is 27.4 times more volatile than Pimco Emerging Local. It trades about 0.21 of its potential returns per unit of risk. Pimco Emerging Local is currently generating about -0.06 per unit of risk. If you would invest 36.00 in Stellar on October 21, 2024 and sell it today you would earn a total of 13.00 from holding Stellar or generate 36.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Stellar vs. Pimco Emerging Local
Performance |
| Timeline |
| Stellar |
| Pimco Emerging Local |
Stellar and Pimco Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stellar and Pimco Emerging
The main advantage of trading using opposite Stellar and Pimco Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellar position performs unexpectedly, Pimco Emerging 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 Emerging will offset losses from the drop in Pimco Emerging's long position.The idea behind Stellar and Pimco Emerging Local pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Pimco Emerging vs. Franklin Adjustable Government | Pimco Emerging vs. Dws Government Money | Pimco Emerging vs. Elfun Government Money | Pimco Emerging vs. Ridgeworth Seix Government |
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 CEOs Directory module to screen CEOs from public companies around the world.
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