Correlation Between American High-income and Pimco Income
Can any of the company-specific risk be diversified away by investing in both American High-income and Pimco Income 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 American High-income and Pimco Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American High Income Municipal and Pimco Income Strategy, you can compare the effects of market volatilities on American High-income and Pimco Income 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 American High-income with a short position of Pimco Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of American High-income and Pimco Income.
Diversification Opportunities for American High-income and Pimco Income
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between American and Pimco is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding American High Income Municipal and Pimco Income Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Income Strategy and American High-income 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 American High Income Municipal are associated (or correlated) with Pimco Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Income Strategy has no effect on the direction of American High-income i.e., American High-income and Pimco Income go up and down completely randomly.
Pair Corralation between American High-income and Pimco Income
Assuming the 90 days horizon American High-income is expected to generate 1.95 times less return on investment than Pimco Income. But when comparing it to its historical volatility, American High Income Municipal is 2.36 times less risky than Pimco Income. It trades about 0.16 of its potential returns per unit of risk. Pimco Income Strategy is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 622.00 in Pimco Income Strategy on September 4, 2024 and sell it today you would earn a total of 129.00 from holding Pimco Income Strategy or generate 20.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American High Income Municipal vs. Pimco Income Strategy
Performance |
| Timeline |
| American High Income |
| Pimco Income Strategy |
American High-income and Pimco Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American High-income and Pimco Income
The main advantage of trading using opposite American High-income and Pimco Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American High-income position performs unexpectedly, Pimco Income 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 Income will offset losses from the drop in Pimco Income's long position.| American High-income vs. T Rowe Price | American High-income vs. Aqr Managed Futures | American High-income vs. Ab Bond Inflation | American High-income vs. Western Asset Inflation |
| Pimco Income vs. Pcm Fund | Pimco Income vs. Pimco Corporate Income | Pimco Income vs. Pimco Global Stocksplus | Pimco Income vs. Pimco High Income |
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 Stocks Directory module to find actively traded stocks across global markets.
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