Correlation Between All Asset and Pimco Rae

Can any of the company-specific risk be diversified away by investing in both All 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 All 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 All Asset Fund and Pimco Rae Worldwide, you can compare the effects of market volatilities on All 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 All Asset with a short position of Pimco Rae. Check out your portfolio center. Please also check ongoing floating volatility patterns of All Asset and Pimco Rae.

Diversification Opportunities for All Asset and Pimco Rae

0.55

Correlation Coefficient

All Asset  Pimco Rae

Very weak diversification

The 3 months correlation between All and Pimco is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding All Asset Fund 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 All 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 All Asset Fund 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 All Asset i.e., All Asset and Pimco Rae go up and down completely randomly.

Pair Corralation between All Asset and Pimco Rae

Assuming the 90 days horizon All Asset Fund is expected to under-perform the Pimco Rae. In addition to that, All Asset is 1.02 times more volatile than Pimco Rae Worldwide. It trades about -0.06 of its total potential returns per unit of risk. Pimco Rae Worldwide is currently generating about 0.0 per unit of volatility. If you would invest  814.00  in Pimco Rae Worldwide on September 16, 2024 and sell it today you would lose (1.00) from holding Pimco Rae Worldwide or give up 0.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

All Asset Fund  vs.  Pimco Rae Worldwide

All Asset Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days All Asset Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, All Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pimco Rae Worldwide

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco Rae Worldwide has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Pimco Rae is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with All Asset and Pimco Rae

The main advantage of trading using opposite All Asset and Pimco Rae positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if All 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.

The idea behind All Asset Fund and Pimco Rae Worldwide 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.