Correlation Between Merck and Pimco Income
Can any of the company-specific risk be diversified away by investing in both Merck 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 Merck and Pimco Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Pimco Income Strategy, you can compare the effects of market volatilities on Merck 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 Merck with a short position of Pimco Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Pimco Income.
Diversification Opportunities for Merck and Pimco Income
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merck and Pimco is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Pimco Income Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Income Strategy and Merck 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 Merck Company 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 Strategy has no effect on the direction of Merck i.e., Merck and Pimco Income go up and down completely randomly.
Pair Corralation between Merck and Pimco Income
Considering the 90-day investment horizon Merck Company is expected to under-perform the Pimco Income. In addition to that, Merck is 3.18 times more volatile than Pimco Income Strategy. It trades about -0.1 of its total potential returns per unit of risk. Pimco Income Strategy is currently generating about 0.15 per unit of volatility. If you would invest 685.00 in Pimco Income Strategy on August 28, 2024 and sell it today you would earn a total of 63.00 from holding Pimco Income Strategy or generate 9.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Pimco Income Strategy
Performance |
| Timeline |
| Merck Company |
| Pimco Income Strategy |
Merck and Pimco Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Pimco Income
The main advantage of trading using opposite Merck and Pimco Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck 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.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
| Pimco Income vs. Pimco Dynamic Income | Pimco Income vs. Guggenheim Strategic Opportunities | Pimco Income vs. Pimco Dynamic Income | Pimco Income vs. BlackRock Limited Duration |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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