Correlation Between Us Treasury and Pimco Long

Can any of the company-specific risk be diversified away by investing in both Us Treasury and Pimco Long 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 Us Treasury and Pimco Long into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Us Treasury Long Term and Pimco Long Term Government, you can compare the effects of market volatilities on Us Treasury and Pimco Long 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 Us Treasury with a short position of Pimco Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Treasury and Pimco Long.

Diversification Opportunities for Us Treasury and Pimco Long

1.0

Correlation Coefficient

Us Treasury  Pimco Long

No risk reduction

The 3 months correlation between PRULX and Pimco is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Us Treasury Long Term and Pimco Long Term Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Long Term and Us Treasury 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 Us Treasury Long Term are associated (or correlated) with Pimco Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Long Term has no effect on the direction of Us Treasury i.e., Us Treasury and Pimco Long go up and down completely randomly.

Pair Corralation between Us Treasury and Pimco Long

Assuming the 90 days horizon Us Treasury Long Term is expected to under-perform the Pimco Long. In addition to that, Us Treasury is 1.0 times more volatile than Pimco Long Term Government. It trades about -0.15 of its total potential returns per unit of risk. Pimco Long Term Government is currently generating about -0.14 per unit of volatility. If you would invest  1,465  in Pimco Long Term Government on October 8, 2024 and sell it today you would lose (101.00) from holding Pimco Long Term Government or give up 6.89% of portfolio value over 90 days.

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

Us Treasury Long Term  vs.  Pimco Long Term Government

Us Treasury Long

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Us Treasury Long Term has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pimco Long Term

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco Long Term Government has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Us Treasury and Pimco Long

The main advantage of trading using opposite Us Treasury and Pimco Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Treasury position performs unexpectedly, Pimco Long 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 Long will offset losses from the drop in Pimco Long's long position.

The idea behind Us Treasury Long Term and Pimco Long Term Government 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.