Correlation Between Pimco California and Pimco Municipal
Can any of the company-specific risk be diversified away by investing in both Pimco California 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 Pimco California and Pimco Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco California Municipal and Pimco Municipal Income, you can compare the effects of market volatilities on Pimco California 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 Pimco California with a short position of Pimco Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco California and Pimco Municipal.
Diversification Opportunities for Pimco California and Pimco Municipal
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pimco and Pimco is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Pimco California Municipal 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 Pimco California 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 California Municipal 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 Pimco California i.e., Pimco California and Pimco Municipal go up and down completely randomly.
Pair Corralation between Pimco California and Pimco Municipal
Considering the 90-day investment horizon Pimco California Municipal is expected to generate 0.61 times more return on investment than Pimco Municipal. However, Pimco California Municipal is 1.64 times less risky than Pimco Municipal. It trades about 0.01 of its potential returns per unit of risk. Pimco Municipal Income is currently generating about -0.03 per unit of risk. If you would invest 594.00 in Pimco California Municipal on August 31, 2024 and sell it today you would earn a total of 1.00 from holding Pimco California Municipal or generate 0.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco California Municipal vs. Pimco Municipal Income
Performance |
| Timeline |
| Pimco California Mun |
| Pimco Municipal Income |
Pimco California and Pimco Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco California and Pimco Municipal
The main advantage of trading using opposite Pimco California and Pimco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco California 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.| Pimco California vs. MFS Investment Grade | Pimco California vs. Eaton Vance Municipal | Pimco California vs. DTF Tax Free | Pimco California vs. HUMANA INC |
| Pimco Municipal vs. Pimco Municipal Income | Pimco Municipal vs. Nuveen Municipal High | Pimco Municipal vs. Nuveen Amt Free Municipal | Pimco Municipal vs. Pimco New York |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |