Correlation Between Pimco Emerging and Prudential Emerging

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Can any of the company-specific risk be diversified away by investing in both Pimco Emerging and Prudential Emerging 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 Prudential Emerging 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 Prudential Emerging Markets, you can compare the effects of market volatilities on Pimco Emerging and Prudential Emerging 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 Prudential Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Emerging and Prudential Emerging.

Diversification Opportunities for Pimco Emerging and Prudential Emerging

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between Pimco and Prudential is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO EMERGING LOCAL and PRUDENTIAL EMERGING MARKETS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Emerging 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 Prudential Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Emerging has no effect on the direction of Pimco Emerging i.e., Pimco Emerging and Prudential Emerging go up and down completely randomly.

Pair Corralation between Pimco Emerging and Prudential Emerging

Assuming the 90 days horizon Pimco Emerging Local is expected to generate 1.05 times more return on investment than Prudential Emerging. However, Pimco Emerging is 1.05 times more volatile than Prudential Emerging Markets. It trades about 0.05 of its potential returns per unit of risk. Prudential Emerging Markets is currently generating about 0.02 per unit of risk. If you would invest  523.00  in Pimco Emerging Local on December 29, 2023 and sell it today you would earn a total of  65.00  from holding Pimco Emerging Local or generate 12.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

PIMCO EMERGING LOCAL  vs.  PRUDENTIAL EMERGING MARKETS

 Performance 
       Timeline  
Pimco Emerging Local 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Pimco Emerging Local has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Pimco Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Prudential Emerging 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Prudential Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Prudential Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pimco Emerging and Prudential Emerging Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pimco Emerging and Prudential Emerging

The main advantage of trading using opposite Pimco Emerging and Prudential Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Emerging position performs unexpectedly, Prudential Emerging 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 Prudential Emerging will offset losses from the drop in Prudential Emerging's long position.
The idea behind Pimco Emerging Local and Prudential Emerging Markets 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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