Correlation Between Dodge Cox and Pimco Income
Can any of the company-specific risk be diversified away by investing in both Dodge Cox 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 Dodge Cox and Pimco Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dodge Cox Stock and Pimco Income Fund, you can compare the effects of market volatilities on Dodge Cox 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 Dodge Cox with a short position of Pimco Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Pimco Income.
Diversification Opportunities for Dodge Cox and Pimco Income
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dodge and Pimco is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and Pimco Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Income and Dodge Cox 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 Dodge Cox Stock 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 Dodge Cox i.e., Dodge Cox and Pimco Income go up and down completely randomly.
Pair Corralation between Dodge Cox and Pimco Income
Assuming the 90 days horizon Dodge Cox Stock is expected to under-perform the Pimco Income. In addition to that, Dodge Cox is 2.68 times more volatile than Pimco Income Fund. It trades about -0.02 of its total potential returns per unit of risk. Pimco Income Fund is currently generating about 0.44 per unit of volatility. If you would invest 1,052 in Pimco Income Fund on November 28, 2024 and sell it today you would earn a total of 20.00 from holding Pimco Income Fund or generate 1.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge Cox Stock vs. Pimco Income Fund
Performance |
| Timeline |
| Dodge Cox Stock |
| Pimco Income |
Dodge Cox and Pimco Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Pimco Income
The main advantage of trading using opposite Dodge Cox and Pimco Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox 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.The idea behind Dodge Cox Stock and Pimco Income Fund 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.| Pimco Income vs. Artisan High Income | Pimco Income vs. Massmutual Premier E | Pimco Income vs. Ambrus Core Bond | Pimco Income vs. Multisector Bond Sma |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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