Correlation Between Realestaterealreturn and Pimco Rae

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

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

Diversification Opportunities for Realestaterealreturn and Pimco Rae

0.6

Correlation Coefficient

Realestaterealreturn  Pimco Rae

Poor diversification

The 3 months correlation between Realestaterealreturn and Pimco is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Realestaterealreturn Strategy and Pimco Rae Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Rae Plus and Realestaterealreturn 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 Realestaterealreturn Strategy Fund 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 Plus has no effect on the direction of Realestaterealreturn i.e., Realestaterealreturn and Pimco Rae go up and down completely randomly.

Pair Corralation between Realestaterealreturn and Pimco Rae

Assuming the 90 days horizon Realestaterealreturn Strategy Fund is expected to under-perform the Pimco Rae. In addition to that, Realestaterealreturn is 1.21 times more volatile than Pimco Rae Plus. It trades about -0.13 of its total potential returns per unit of risk. Pimco Rae Plus is currently generating about -0.03 per unit of volatility. If you would invest  1,957  in Pimco Rae Plus on September 25, 2024 and sell it today you would lose (31.00) from holding Pimco Rae Plus or give up 1.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Realestaterealreturn Strategy   vs.  Pimco Rae Plus

Realestaterealreturn

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Realestaterealreturn Strategy Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest unfluctuating 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.

Pimco Rae Plus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco Rae Plus has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Pimco Rae is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Realestaterealreturn and Pimco Rae

The main advantage of trading using opposite Realestaterealreturn and Pimco Rae positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Realestaterealreturn 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 Realestaterealreturn Strategy Fund and Pimco Rae Plus 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.