Correlation Between Pimco Foreign and High Yield
Can any of the company-specific risk be diversified away by investing in both Pimco Foreign and High Yield 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 Pimco Foreign and High Yield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Foreign Bond and High Yield Fund, you can compare the effects of market volatilities on Pimco Foreign and High Yield 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 Pimco Foreign with a short position of High Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Foreign and High Yield.
Diversification Opportunities for Pimco Foreign and High Yield
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pimco and High is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Foreign Bond and High Yield Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Fund and Pimco Foreign 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 Pimco Foreign Bond are associated (or correlated) with High Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Fund has no effect on the direction of Pimco Foreign i.e., Pimco Foreign and High Yield go up and down completely randomly.
Pair Corralation between Pimco Foreign and High Yield
Assuming the 90 days horizon Pimco Foreign Bond is expected to generate 1.58 times more return on investment than High Yield. However, Pimco Foreign is 1.58 times more volatile than High Yield Fund. It trades about 0.06 of its potential returns per unit of risk. High Yield Fund is currently generating about 0.08 per unit of risk. If you would invest 995.00 in Pimco Foreign Bond on September 10, 2024 and sell it today you would earn a total of 3.00 from holding Pimco Foreign Bond or generate 0.3% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Pimco Foreign Bond vs. High Yield Fund
Performance |
Timeline |
Pimco Foreign Bond |
High Yield Fund |
Pimco Foreign and High Yield Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pimco Foreign and High Yield
The main advantage of trading using opposite Pimco Foreign and High Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Foreign position performs unexpectedly, High Yield 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 High Yield will offset losses from the drop in High Yield's long position.Pimco Foreign vs. Vanguard Total International | Pimco Foreign vs. Vanguard Total International | Pimco Foreign vs. Vanguard Total International | Pimco Foreign vs. Vanguard Total International |
High Yield vs. Gamco Global Gold | High Yield vs. Franklin Gold Precious | High Yield vs. Sprott Gold Equity | High Yield vs. International Investors Gold |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |