Correlation Between Five Below and PIMCO 1
Can any of the company-specific risk be diversified away by investing in both Five Below and PIMCO 1 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 Five Below and PIMCO 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Five Below and PIMCO 1 5 Year, you can compare the effects of market volatilities on Five Below and PIMCO 1 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 Five Below with a short position of PIMCO 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Five Below and PIMCO 1.
Diversification Opportunities for Five Below and PIMCO 1
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Five and PIMCO is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Five Below and PIMCO 1 5 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO 1 5 and Five Below 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 Five Below are associated (or correlated) with PIMCO 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO 1 5 has no effect on the direction of Five Below i.e., Five Below and PIMCO 1 go up and down completely randomly.
Pair Corralation between Five Below and PIMCO 1
Given the investment horizon of 90 days Five Below is expected to under-perform the PIMCO 1. In addition to that, Five Below is 13.53 times more volatile than PIMCO 1 5 Year. It trades about -0.37 of its total potential returns per unit of risk. PIMCO 1 5 Year is currently generating about -0.06 per unit of volatility. If you would invest 5,138 in PIMCO 1 5 Year on January 24, 2024 and sell it today you would lose (9.00) from holding PIMCO 1 5 Year or give up 0.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Five Below vs. PIMCO 1 5 Year
Performance |
| Timeline |
| Five Below |
| PIMCO 1 5 |
Five Below and PIMCO 1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Five Below and PIMCO 1
The main advantage of trading using opposite Five Below and PIMCO 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Five Below position performs unexpectedly, PIMCO 1 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 1 will offset losses from the drop in PIMCO 1's long position.The idea behind Five Below and PIMCO 1 5 Year 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.| PIMCO 1 vs. HUMANA INC | PIMCO 1 vs. Aquagold International | PIMCO 1 vs. Barloworld Ltd ADR | PIMCO 1 vs. Morningstar Unconstrained Allocation |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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