Correlation Between PIMCO Enhanced and Western Asset
Can any of the company-specific risk be diversified away by investing in both PIMCO Enhanced and Western Asset 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 PIMCO Enhanced and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PIMCO Enhanced Low and Western Asset Short, you can compare the effects of market volatilities on PIMCO Enhanced and Western Asset 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 PIMCO Enhanced with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Enhanced and Western Asset.
Diversification Opportunities for PIMCO Enhanced and Western Asset
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PIMCO and Western is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Enhanced Low and Western Asset Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Short and PIMCO Enhanced 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 PIMCO Enhanced Low are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Short has no effect on the direction of PIMCO Enhanced i.e., PIMCO Enhanced and Western Asset go up and down completely randomly.
Pair Corralation between PIMCO Enhanced and Western Asset
Given the investment horizon of 90 days PIMCO Enhanced Low is expected to generate about the same return on investment as Western Asset Short. But, PIMCO Enhanced Low is 1.39 times less risky than Western Asset. It trades about 0.15 of its potential returns per unit of risk. Western Asset Short is currently generating about 0.11 per unit of risk. If you would invest 2,163 in Western Asset Short on September 3, 2024 and sell it today you would earn a total of 237.00 from holding Western Asset Short or generate 10.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PIMCO Enhanced Low vs. Western Asset Short
Performance |
| Timeline |
| PIMCO Enhanced Low |
| Western Asset Short |
PIMCO Enhanced and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIMCO Enhanced and Western Asset
The main advantage of trading using opposite PIMCO Enhanced and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO Enhanced position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| PIMCO Enhanced vs. PIMCO Enhanced Short | PIMCO Enhanced vs. SPDR DoubleLine Total | PIMCO Enhanced vs. FlexShares Ready Access | PIMCO Enhanced vs. iShares Ultra Short Term |
| Western Asset vs. iShares 1 5 Year | Western Asset vs. SPDR Barclays Short | Western Asset vs. iShares Core 1 5 | Western Asset vs. iShares 0 5 Year |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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