Correlation Between Pimco Real and Pimco Rae
Can any of the company-specific risk be diversified away by investing in both Pimco Real 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 Pimco Real and Pimco Rae into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Real Return and Pimco Rae Worldwide, you can compare the effects of market volatilities on Pimco Real 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 Pimco Real with a short position of Pimco Rae. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Real and Pimco Rae.
Diversification Opportunities for Pimco Real and Pimco Rae
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pimco and Pimco is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Real Return 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 Pimco Real 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 Real Return 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 Pimco Real i.e., Pimco Real and Pimco Rae go up and down completely randomly.
Pair Corralation between Pimco Real and Pimco Rae
Assuming the 90 days horizon Pimco Real Return is expected to generate 21.28 times more return on investment than Pimco Rae. However, Pimco Real is 21.28 times more volatile than Pimco Rae Worldwide. It trades about 0.03 of its potential returns per unit of risk. Pimco Rae Worldwide is currently generating about 0.07 per unit of risk. If you would invest 1,216 in Pimco Real Return on September 20, 2024 and sell it today you would lose (38.00) from holding Pimco Real Return or give up 3.12% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 99.8% |
Values | Daily Returns |
Pimco Real Return vs. Pimco Rae Worldwide
Performance |
Timeline |
Pimco Real Return |
Pimco Rae Worldwide |
Pimco Real and Pimco Rae Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pimco Real and Pimco Rae
The main advantage of trading using opposite Pimco Real and Pimco Rae positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Real 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.Pimco Real vs. Pimco Rae Worldwide | Pimco Real vs. Pimco Rae Worldwide | Pimco Real vs. Pimco Rae Worldwide | Pimco Real vs. Pimco Rae Worldwide |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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