Correlation Between Ab Bond and Pimco Rae
Can any of the company-specific risk be diversified away by investing in both Ab Bond 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 Ab Bond and Pimco Rae into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Bond Inflation and Pimco Rae Worldwide, you can compare the effects of market volatilities on Ab Bond 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 Ab Bond with a short position of Pimco Rae. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Bond and Pimco Rae.
Diversification Opportunities for Ab Bond and Pimco Rae
Very poor diversification
The 3 months correlation between ABNAX and Pimco is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Ab Bond 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 Ab Bond 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 Ab Bond 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 Ab Bond i.e., Ab Bond and Pimco Rae go up and down completely randomly.
Pair Corralation between Ab Bond and Pimco Rae
Assuming the 90 days horizon Ab Bond is expected to generate 2.56 times less return on investment than Pimco Rae. But when comparing it to its historical volatility, Ab Bond Inflation is 2.51 times less risky than Pimco Rae. It trades about 0.12 of its potential returns per unit of risk. Pimco Rae Worldwide is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 748.00 in Pimco Rae Worldwide on November 18, 2024 and sell it today you would earn a total of 26.00 from holding Pimco Rae Worldwide or generate 3.48% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Ab Bond Inflation vs. Pimco Rae Worldwide
Performance |
Timeline |
Ab Bond Inflation |
Pimco Rae Worldwide |
Ab Bond and Pimco Rae Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ab Bond and Pimco Rae
The main advantage of trading using opposite Ab Bond and Pimco Rae positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Bond 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.Ab Bond vs. Glg Intl Small | ||
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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