Correlation Between Pimco Emerging and Ophmr Eml
Can any of the company-specific risk be diversified away by investing in both Pimco Emerging and Ophmr Eml 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 Emerging and Ophmr Eml into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Emerging Local and Ophmr Eml Dbt, you can compare the effects of market volatilities on Pimco Emerging and Ophmr Eml 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 Emerging with a short position of Ophmr Eml. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Emerging and Ophmr Eml.
Diversification Opportunities for Pimco Emerging and Ophmr Eml
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pimco and Ophmr is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Emerging Local and Ophmr Eml Dbt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ophmr Eml Dbt and Pimco Emerging 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 Emerging Local are associated (or correlated) with Ophmr Eml. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ophmr Eml Dbt has no effect on the direction of Pimco Emerging i.e., Pimco Emerging and Ophmr Eml go up and down completely randomly.
Pair Corralation between Pimco Emerging and Ophmr Eml
Assuming the 90 days horizon Pimco Emerging Local is expected to generate 0.9 times more return on investment than Ophmr Eml. However, Pimco Emerging Local is 1.12 times less risky than Ophmr Eml. It trades about -0.24 of its potential returns per unit of risk. Ophmr Eml Dbt is currently generating about -0.3 per unit of risk. If you would invest 585.00 in Pimco Emerging Local on January 26, 2024 and sell it today you would lose (14.00) from holding Pimco Emerging Local or give up 2.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Emerging Local vs. Ophmr Eml Dbt
Performance |
| Timeline |
| Pimco Emerging Local |
| Ophmr Eml Dbt |
Pimco Emerging and Ophmr Eml Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Emerging and Ophmr Eml
The main advantage of trading using opposite Pimco Emerging and Ophmr Eml positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Emerging position performs unexpectedly, Ophmr Eml 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 Ophmr Eml will offset losses from the drop in Ophmr Eml's long position.The idea behind Pimco Emerging Local and Ophmr Eml Dbt 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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