Correlation Between Pimco Credit and Diversified Income
Can any of the company-specific risk be diversified away by investing in both Pimco Credit and Diversified 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 Pimco Credit and Diversified Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Credit Absolute and Diversified Income Fund, you can compare the effects of market volatilities on Pimco Credit and Diversified 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 Pimco Credit with a short position of Diversified Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Credit and Diversified Income.
Diversification Opportunities for Pimco Credit and Diversified Income
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Pimco and Diversified is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Credit Absolute and Diversified Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diversified Income and Pimco Credit 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 Credit Absolute are associated (or correlated) with Diversified Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diversified Income has no effect on the direction of Pimco Credit i.e., Pimco Credit and Diversified Income go up and down completely randomly.
Pair Corralation between Pimco Credit and Diversified Income
Assuming the 90 days horizon Pimco Credit is expected to generate 1.68 times less return on investment than Diversified Income. But when comparing it to its historical volatility, Pimco Credit Absolute is 1.59 times less risky than Diversified Income. It trades about 0.21 of its potential returns per unit of risk. Diversified Income Fund is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 965.00 in Diversified Income Fund on August 31, 2024 and sell it today you would earn a total of 10.00 from holding Diversified Income Fund or generate 1.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Credit Absolute vs. Diversified Income Fund
Performance |
| Timeline |
| Pimco Credit Absolute |
| Diversified Income |
Pimco Credit and Diversified Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Credit and Diversified Income
The main advantage of trading using opposite Pimco Credit and Diversified Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Credit position performs unexpectedly, Diversified 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 Diversified Income will offset losses from the drop in Diversified Income's long position.| Pimco Credit vs. Goehring Rozencwajg Resources | Pimco Credit vs. Clearbridge Energy Mlp | Pimco Credit vs. Tortoise Energy Independence | Pimco Credit vs. Gmo Resources |
| Diversified Income vs. Pimco Income Fund | Diversified Income vs. Pimco Income Fund | Diversified Income vs. Pimco Income Fund | Diversified Income vs. Pimco Income Fund |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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