Correlation Between Inflation-protected and Pimco Income
Can any of the company-specific risk be diversified away by investing in both Inflation-protected 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 Inflation-protected and Pimco Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inflation Protected Bond Fund and Pimco Income Fund, you can compare the effects of market volatilities on Inflation-protected 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 Inflation-protected with a short position of Pimco Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inflation-protected and Pimco Income.
Diversification Opportunities for Inflation-protected and Pimco Income
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Inflation-protected and PIMCO is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Inflation Protected Bond Fund and Pimco Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Income and Inflation-protected 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 Inflation Protected Bond Fund 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 Inflation-protected i.e., Inflation-protected and Pimco Income go up and down completely randomly.
Pair Corralation between Inflation-protected and Pimco Income
Assuming the 90 days horizon Inflation Protected Bond Fund is expected to generate 1.83 times more return on investment than Pimco Income. However, Inflation-protected is 1.83 times more volatile than Pimco Income Fund. It trades about 0.11 of its potential returns per unit of risk. Pimco Income Fund is currently generating about 0.11 per unit of risk. If you would invest 909.00 in Inflation Protected Bond Fund on September 4, 2024 and sell it today you would earn a total of 125.00 from holding Inflation Protected Bond Fund or generate 13.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inflation Protected Bond Fund vs. Pimco Income Fund
Performance |
| Timeline |
| Inflation Protected |
| Pimco Income |
Inflation-protected and Pimco Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inflation-protected and Pimco Income
The main advantage of trading using opposite Inflation-protected and Pimco Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inflation-protected 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.| Inflation-protected vs. Wells Fargo Advantage | Inflation-protected vs. Wells Fargo Ultra | Inflation-protected vs. Wells Fargo Ultra | Inflation-protected vs. Wells Fargo Emerging |
| Pimco Income vs. Inflation Protected Bond Fund | Pimco Income vs. Ab Bond Inflation | Pimco Income vs. T Rowe Price | Pimco Income vs. Ab Bond Inflation |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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