Correlation Between Pimco All and Dreyfus Global

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

By analyzing existing cross correlation between Pimco All Asset and Dreyfus Global Real, you can compare the effects of market volatilities on Pimco All and Dreyfus Global 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 All with a short position of Dreyfus Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco All and Dreyfus Global.

Diversification Opportunities for Pimco All and Dreyfus Global

0.57

Correlation Coefficient

Pimco All  Dreyfus Global

Very weak diversification

The 3 months correlation between Pimco and Dreyfus is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Pimco All Asset and Dreyfus Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Global Real and Pimco All 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 All Asset are associated (or correlated) with Dreyfus Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Global Real has no effect on the direction of Pimco All i.e., Pimco All and Dreyfus Global go up and down completely randomly.

Pair Corralation between Pimco All and Dreyfus Global

Assuming the 90 days horizon Pimco All is expected to generate 1.91 times less return on investment than Dreyfus Global. In addition to that, Pimco All is 1.04 times more volatile than Dreyfus Global Real. It trades about 0.07 of its total potential returns per unit of risk. Dreyfus Global Real is currently generating about 0.13 per unit of volatility. If you would invest  1,525  in Dreyfus Global Real on February 29, 2024 and sell it today you would earn a total of  49.00  from holding Dreyfus Global Real or generate 3.21% return on investment over 90 days.

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

Pimco All Asset  vs.  Dreyfus Global Real

Pimco All Asset

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco All Asset are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pimco All is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dreyfus Global Real

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus Global Real are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Dreyfus Global 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 All and Dreyfus Global

The main advantage of trading using opposite Pimco All and Dreyfus Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco All position performs unexpectedly, Dreyfus Global 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 Dreyfus Global will offset losses from the drop in Dreyfus Global's long position.

The idea behind Pimco All Asset and Dreyfus Global Real 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.