Correlation Between California High-yield and Pimco Income
Can any of the company-specific risk be diversified away by investing in both California High-yield 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 California High-yield and Pimco Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California High Yield Municipal and Pimco Income Fund, you can compare the effects of market volatilities on California High-yield 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 California High-yield with a short position of Pimco Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of California High-yield and Pimco Income.
Diversification Opportunities for California High-yield and Pimco Income
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between California and Pimco is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding California High Yield Municipa and Pimco Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Income and California High-yield 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 California High Yield 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 has no effect on the direction of California High-yield i.e., California High-yield and Pimco Income go up and down completely randomly.
Pair Corralation between California High-yield and Pimco Income
Assuming the 90 days horizon California High Yield Municipal is expected to under-perform the Pimco Income. But the mutual fund apears to be less risky and, when comparing its historical volatility, California High Yield Municipal is 1.21 times less risky than Pimco Income. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Pimco Income Fund is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,046 in Pimco Income Fund on October 20, 2024 and sell it today you would earn a total of 7.00 from holding Pimco Income Fund or generate 0.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
California High Yield Municipa vs. Pimco Income Fund
Performance |
| Timeline |
| California High Yield |
| Pimco Income |
California High-yield and Pimco Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California High-yield and Pimco Income
The main advantage of trading using opposite California High-yield and Pimco Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California High-yield 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.| California High-yield vs. Prudential High Yield | California High-yield vs. Voya High Yield | California High-yield vs. Msift High Yield | California High-yield vs. Dunham High Yield |
| Pimco Income vs. Technology Ultrasector Profund | Pimco Income vs. Invesco Technology Fund | Pimco Income vs. Goldman Sachs Technology | Pimco Income vs. Mfs Technology Fund |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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