Correlation Between PIMCO 1 and Murphy USA
Can any of the company-specific risk be diversified away by investing in both PIMCO 1 and Murphy USA 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 1 and Murphy USA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PIMCO 1 5 Year and Murphy USA, you can compare the effects of market volatilities on PIMCO 1 and Murphy USA 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 1 with a short position of Murphy USA. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO 1 and Murphy USA.
Diversification Opportunities for PIMCO 1 and Murphy USA
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PIMCO and Murphy is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO 1 5 Year and Murphy USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Murphy USA and PIMCO 1 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 1 5 Year are associated (or correlated) with Murphy USA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Murphy USA has no effect on the direction of PIMCO 1 i.e., PIMCO 1 and Murphy USA go up and down completely randomly.
Pair Corralation between PIMCO 1 and Murphy USA
Given the investment horizon of 90 days PIMCO 1 5 Year is expected to under-perform the Murphy USA. But the etf apears to be less risky and, when comparing its historical volatility, PIMCO 1 5 Year is 6.89 times less risky than Murphy USA. The etf trades about -0.04 of its potential returns per unit of risk. The Murphy USA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 41,479 in Murphy USA on January 25, 2024 and sell it today you would earn a total of 632.00 from holding Murphy USA or generate 1.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
PIMCO 1 5 Year vs. Murphy USA
Performance |
| Timeline |
| PIMCO 1 5 |
| Murphy USA |
PIMCO 1 and Murphy USA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIMCO 1 and Murphy USA
The main advantage of trading using opposite PIMCO 1 and Murphy USA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO 1 position performs unexpectedly, Murphy USA 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 Murphy USA will offset losses from the drop in Murphy USA's long position.| PIMCO 1 vs. iShares iBoxx Investment | PIMCO 1 vs. iShares 1 3 Year | PIMCO 1 vs. iShares 7 10 Year | PIMCO 1 vs. iShares Core Aggregate |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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