Correlation Between Emerging Markets and Pimco Foreign
Can any of the company-specific risk be diversified away by investing in both Emerging Markets and Pimco Foreign 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 Emerging Markets and Pimco Foreign into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerging Markets Bond and Pimco Foreign Bond, you can compare the effects of market volatilities on Emerging Markets and Pimco Foreign 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 Emerging Markets with a short position of Pimco Foreign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Pimco Foreign.
Diversification Opportunities for Emerging Markets and Pimco Foreign
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Emerging and Pimco is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Markets Bond and Pimco Foreign Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Foreign Bond and Emerging Markets 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 Emerging Markets Bond are associated (or correlated) with Pimco Foreign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Foreign Bond has no effect on the direction of Emerging Markets i.e., Emerging Markets and Pimco Foreign go up and down completely randomly.
Pair Corralation between Emerging Markets and Pimco Foreign
Assuming the 90 days horizon Emerging Markets Bond is expected to under-perform the Pimco Foreign. In addition to that, Emerging Markets is 1.42 times more volatile than Pimco Foreign Bond. It trades about -0.11 of its total potential returns per unit of risk. Pimco Foreign Bond is currently generating about -0.01 per unit of volatility. If you would invest 994.00 in Pimco Foreign Bond on September 24, 2024 and sell it today you would lose (2.00) from holding Pimco Foreign Bond or give up 0.2% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Emerging Markets Bond vs. Pimco Foreign Bond
Performance |
Timeline |
Emerging Markets Bond |
Pimco Foreign Bond |
Emerging Markets and Pimco Foreign Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Emerging Markets and Pimco Foreign
The main advantage of trading using opposite Emerging Markets and Pimco Foreign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets position performs unexpectedly, Pimco Foreign 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 Foreign will offset losses from the drop in Pimco Foreign's long position.Emerging Markets vs. Pimco Rae Worldwide | Emerging Markets vs. Pimco Rae Worldwide | Emerging Markets vs. Pimco Rae Worldwide | Emerging Markets vs. Pimco Rae Worldwide |
Pimco Foreign vs. Foreign Bond Fund | Pimco Foreign vs. Emerging Markets Bond | Pimco Foreign vs. Low Duration Fund | Pimco Foreign vs. Pimco Income Fund |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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