Correlation Between Pimco Rae and All Asset

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

By analyzing existing cross correlation between Pimco Rae Worldwide and All Asset Fund, you can compare the effects of market volatilities on Pimco Rae and All Asset 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 Rae with a short position of All Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Rae and All Asset.

Diversification Opportunities for Pimco Rae and All Asset

0.62

Correlation Coefficient

Pimco Rae  All Asset

Poor diversification

The 3 months correlation between Pimco and All is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Rae Worldwide and All Asset Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on All Asset Fund and Pimco Rae 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 Rae Worldwide are associated (or correlated) with All Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of All Asset Fund has no effect on the direction of Pimco Rae i.e., Pimco Rae and All Asset go up and down completely randomly.

Pair Corralation between Pimco Rae and All Asset

Assuming the 90 days horizon Pimco Rae Worldwide is expected to under-perform the All Asset. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pimco Rae Worldwide is 1.09 times less risky than All Asset. The mutual fund trades about -0.47 of its potential returns per unit of risk. The All Asset Fund is currently generating about -0.41 of returns per unit of risk over similar time horizon. If you would invest  1,130  in All Asset Fund on September 25, 2024 and sell it today you would lose (30.00) from holding All Asset Fund or give up 2.65% of portfolio value over 90 days.

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

Pimco Rae Worldwide  vs.  All Asset Fund

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 forward indicators, Pimco Rae is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 basic indicators, All Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pimco Rae and All Asset

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

The idea behind Pimco Rae Worldwide and All Asset Fund 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.