Correlation Between Pimco Floating and Pimco Foreign

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

By analyzing existing cross correlation between Pimco Floating Income and Pimco Foreign Bond, you can compare the effects of market volatilities on Pimco Floating 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 Pimco Floating with a short position of Pimco Foreign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Floating and Pimco Foreign.

Diversification Opportunities for Pimco Floating and Pimco Foreign

0.78

Correlation Coefficient

Pimco Floating  Pimco Foreign

Poor diversification

The 3 months correlation between Pimco and Pimco is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Floating Income 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 Pimco Floating 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 Floating Income 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 Pimco Floating i.e., Pimco Floating and Pimco Foreign go up and down completely randomly.

Pair Corralation between Pimco Floating and Pimco Foreign

Assuming the 90 days horizon Pimco Floating Income is expected to under-perform the Pimco Foreign. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pimco Floating Income is 2.12 times less risky than Pimco Foreign. The mutual fund trades about -0.25 of its potential returns per unit of risk. The Pimco Foreign Bond is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  997.00  in Pimco Foreign Bond on September 26, 2024 and sell it today you would lose (4.00) from holding Pimco Foreign Bond or give up 0.4% of portfolio value over 90 days.

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

Pimco Floating Income  vs.  Pimco Foreign Bond

Pimco Floating Income

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pimco Foreign Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco Foreign Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Pimco Foreign 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 Floating and Pimco Foreign

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

The idea behind Pimco Floating Income and Pimco Foreign Bond 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.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..