Correlation Between Pimco New and Aberdeen Australia

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

By analyzing existing cross correlation between Pimco New York and Aberdeen Australia Ef, you can compare the effects of market volatilities on Pimco New and Aberdeen Australia 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 New with a short position of Aberdeen Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco New and Aberdeen Australia.

Diversification Opportunities for Pimco New and Aberdeen Australia

0.68

Correlation Coefficient

Pimco New  Aberdeen Australia

Poor diversification

The 3 months correlation between Pimco and Aberdeen is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Pimco New York and Aberdeen Australia Ef in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Australia and Pimco New 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 New York are associated (or correlated) with Aberdeen Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Australia has no effect on the direction of Pimco New i.e., Pimco New and Aberdeen Australia go up and down completely randomly.

Pair Corralation between Pimco New and Aberdeen Australia

Considering the 90-day investment horizon Pimco New York is expected to generate 0.69 times more return on investment than Aberdeen Australia. However, Pimco New York is 1.45 times less risky than Aberdeen Australia. It trades about 0.38 of its potential returns per unit of risk. Aberdeen Australia Ef is currently generating about -0.19 per unit of risk. If you would invest  571.00  in Pimco New York on November 29, 2024 and sell it today you would earn a total of  23.00  from holding Pimco New York or generate 4.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Pimco New York  vs.  Aberdeen Australia Ef

Pimco New York

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco New York are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, Pimco New is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Aberdeen Australia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aberdeen Australia Ef has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the mutual fund stockholders.

Pair Trading with Pimco New and Aberdeen Australia

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

The idea behind Pimco New York and Aberdeen Australia Ef 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.