Correlation Between DTF Tax and Pimco Municipal
Can any of the company-specific risk be diversified away by investing in both DTF Tax and Pimco Municipal 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 DTF Tax and Pimco Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DTF Tax Free and Pimco Municipal Income, you can compare the effects of market volatilities on DTF Tax and Pimco Municipal 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 DTF Tax with a short position of Pimco Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of DTF Tax and Pimco Municipal.
Diversification Opportunities for DTF Tax and Pimco Municipal
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between DTF and Pimco is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding DTF Tax Free and Pimco Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Municipal Income and DTF Tax 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 DTF Tax Free are associated (or correlated) with Pimco Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Municipal Income has no effect on the direction of DTF Tax i.e., DTF Tax and Pimco Municipal go up and down completely randomly.
Pair Corralation between DTF Tax and Pimco Municipal
Considering the 90-day investment horizon DTF Tax Free is expected to generate 0.69 times more return on investment than Pimco Municipal. However, DTF Tax Free is 1.46 times less risky than Pimco Municipal. It trades about 0.03 of its potential returns per unit of risk. Pimco Municipal Income is currently generating about 0.01 per unit of risk. If you would invest 1,040 in DTF Tax Free on September 2, 2024 and sell it today you would earn a total of 87.00 from holding DTF Tax Free or generate 8.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
DTF Tax Free vs. Pimco Municipal Income
Performance |
| Timeline |
| DTF Tax Free |
| Pimco Municipal Income |
DTF Tax and Pimco Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DTF Tax and Pimco Municipal
The main advantage of trading using opposite DTF Tax and Pimco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DTF Tax position performs unexpectedly, Pimco Municipal 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 Municipal will offset losses from the drop in Pimco Municipal's long position.| DTF Tax vs. MFS Investment Grade | DTF Tax vs. Eaton Vance National | DTF Tax vs. Invesco High Income | DTF Tax vs. MFS High Yield |
| Pimco Municipal vs. Pimco Municipal Income | Pimco Municipal vs. Nuveen Municipal High | Pimco Municipal vs. Nuveen Municipal Credit | Pimco Municipal vs. Nuveen Amt Free Municipal |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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