Correlation Between Gold And and Pimco Rae

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

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

Diversification Opportunities for Gold And and Pimco Rae

0.69

Correlation Coefficient

Gold And  Pimco Rae

Poor diversification

The 3 months correlation between Gold and Pimco is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Gold And Precious 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 Gold And 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 Gold And Precious 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 Gold And i.e., Gold And and Pimco Rae go up and down completely randomly.

Pair Corralation between Gold And and Pimco Rae

Assuming the 90 days horizon Gold And Precious is expected to generate 3.04 times more return on investment than Pimco Rae. However, Gold And is 3.04 times more volatile than Pimco Rae Worldwide. It trades about 0.23 of its potential returns per unit of risk. Pimco Rae Worldwide is currently generating about 0.2 per unit of risk. If you would invest  1,143  in Gold And Precious on December 19, 2024 and sell it today you would earn a total of  281.00  from holding Gold And Precious or generate 24.58% return on investment over 90 days.

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

Gold And Precious  vs.  Pimco Rae Worldwide

Gold And Precious

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gold And Precious are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Gold And showed solid returns over the last few months and may actually be approaching a breakup point.

Pimco Rae Worldwide

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Rae Worldwide are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Pimco Rae may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Gold And and Pimco Rae

The main advantage of trading using opposite Gold And and Pimco Rae positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold And 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.

The idea behind Gold And Precious and Pimco Rae Worldwide 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.