Correlation Between Peabody Energy and PIMCO RAFI

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Peabody Energy and PIMCO RAFI 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 Peabody Energy and PIMCO RAFI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Peabody Energy Corp and PIMCO RAFI Dynamic, you can compare the effects of market volatilities on Peabody Energy and PIMCO RAFI 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 Peabody Energy with a short position of PIMCO RAFI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peabody Energy and PIMCO RAFI.

Diversification Opportunities for Peabody Energy and PIMCO RAFI

-0.16
  Correlation Coefficient

Good diversification

The 3 months correlation between Peabody and PIMCO is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Peabody Energy Corp and PIMCO RAFI Dynamic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO RAFI Dynamic and Peabody Energy 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 Peabody Energy Corp are associated (or correlated) with PIMCO RAFI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO RAFI Dynamic has no effect on the direction of Peabody Energy i.e., Peabody Energy and PIMCO RAFI go up and down completely randomly.

Pair Corralation between Peabody Energy and PIMCO RAFI

Considering the 90-day investment horizon Peabody Energy Corp is expected to under-perform the PIMCO RAFI. In addition to that, Peabody Energy is 3.54 times more volatile than PIMCO RAFI Dynamic. It trades about -0.04 of its total potential returns per unit of risk. PIMCO RAFI Dynamic is currently generating about 0.18 per unit of volatility. If you would invest  1,915  in PIMCO RAFI Dynamic on December 30, 2023 and sell it today you would earn a total of  40.00  from holding PIMCO RAFI Dynamic or generate 2.09% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Peabody Energy Corp  vs.  PIMCO RAFI Dynamic

 Performance 
       Timeline  
Peabody Energy Corp 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Peabody Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Peabody Energy is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
PIMCO RAFI Dynamic 

Risk-Adjusted Performance

5 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO RAFI Dynamic are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, PIMCO RAFI is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Peabody Energy and PIMCO RAFI Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Peabody Energy and PIMCO RAFI

The main advantage of trading using opposite Peabody Energy and PIMCO RAFI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peabody Energy position performs unexpectedly, PIMCO RAFI 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 PIMCO RAFI will offset losses from the drop in PIMCO RAFI's long position.
The idea behind Peabody Energy Corp and PIMCO RAFI Dynamic 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

Other Complementary Tools

Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Analyst Advice
Analyst recommendations and target price estimates broken down by several categories
Money Managers
Screen money managers from public funds and ETFs managed around the world
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
FinTech Suite
Use AI to screen and filter profitable investment opportunities
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites