Correlation Between Pimco Real and Vanguard Inflation
Can any of the company-specific risk be diversified away by investing in both Pimco Real and Vanguard Inflation 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 Real and Vanguard Inflation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Real Return and Vanguard Inflation Protected Securities, you can compare the effects of market volatilities on Pimco Real and Vanguard Inflation 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 Real with a short position of Vanguard Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Real and Vanguard Inflation.
Diversification Opportunities for Pimco Real and Vanguard Inflation
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pimco and Vanguard is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Real Return and Vanguard Inflation Protected S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Inflation and Pimco Real 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 Real Return are associated (or correlated) with Vanguard Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Inflation has no effect on the direction of Pimco Real i.e., Pimco Real and Vanguard Inflation go up and down completely randomly.
Pair Corralation between Pimco Real and Vanguard Inflation
Assuming the 90 days horizon Pimco Real Return is expected to under-perform the Vanguard Inflation. In addition to that, Pimco Real is 1.01 times more volatile than Vanguard Inflation Protected Securities. It trades about -0.18 of its total potential returns per unit of risk. Vanguard Inflation Protected Securities is currently generating about -0.14 per unit of volatility. If you would invest 2,284 in Vanguard Inflation Protected Securities on January 20, 2024 and sell it today you would lose (24.00) from holding Vanguard Inflation Protected Securities or give up 1.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Pimco Real Return vs. Vanguard Inflation Protected S
Performance |
| Timeline |
| Pimco Real Return |
| Vanguard Inflation |
Pimco Real and Vanguard Inflation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Real and Vanguard Inflation
The main advantage of trading using opposite Pimco Real and Vanguard Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Real position performs unexpectedly, Vanguard Inflation 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 Vanguard Inflation will offset losses from the drop in Vanguard Inflation's long position.| Pimco Real vs. Pimco Rae Worldwide | Pimco Real vs. Pimco Rae Worldwide | Pimco Real vs. Pimco Rae Worldwide | Pimco Real vs. Pimco Rae Worldwide |
| Vanguard Inflation vs. Vanguard Short Term Investment Grade | Vanguard Inflation vs. Vanguard High Yield Porate | Vanguard Inflation vs. Vanguard Gnma Fund | Vanguard Inflation vs. Vanguard Reit Index |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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