Correlation Between Ab Municipal and Pimco Total
Can any of the company-specific risk be diversified away by investing in both Ab Municipal and Pimco Total 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 Ab Municipal and Pimco Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Municipal Bond and Pimco Total Return, you can compare the effects of market volatilities on Ab Municipal and Pimco Total 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 Ab Municipal with a short position of Pimco Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Municipal and Pimco Total.
Diversification Opportunities for Ab Municipal and Pimco Total
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AUNTX and Pimco is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ab Municipal Bond and Pimco Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Total Return and Ab Municipal 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 Ab Municipal Bond are associated (or correlated) with Pimco Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Total Return has no effect on the direction of Ab Municipal i.e., Ab Municipal and Pimco Total go up and down completely randomly.
Pair Corralation between Ab Municipal and Pimco Total
Assuming the 90 days horizon Ab Municipal Bond is expected to generate 0.35 times more return on investment than Pimco Total. However, Ab Municipal Bond is 2.88 times less risky than Pimco Total. It trades about 0.32 of its potential returns per unit of risk. Pimco Total Return is currently generating about 0.06 per unit of risk. If you would invest 1,063 in Ab Municipal Bond on November 3, 2024 and sell it today you would earn a total of 9.00 from holding Ab Municipal Bond or generate 0.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Municipal Bond vs. Pimco Total Return
Performance |
| Timeline |
| Ab Municipal Bond |
| Pimco Total Return |
Ab Municipal and Pimco Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Municipal and Pimco Total
The main advantage of trading using opposite Ab Municipal and Pimco Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Municipal position performs unexpectedly, Pimco Total 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 Total will offset losses from the drop in Pimco Total's long position.| Ab Municipal vs. Multisector Bond Sma | Ab Municipal vs. Artisan High Income | Ab Municipal vs. Barings High Yield | Ab Municipal vs. Ab Bond Inflation |
| Pimco Total vs. Adams Natural Resources | Pimco Total vs. Goehring Rozencwajg Resources | Pimco Total vs. Fidelity Advisor Energy | Pimco Total vs. Hennessy Bp Energy |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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