Correlation Between Pimco Moditiesplus and Western Asset
Can any of the company-specific risk be diversified away by investing in both Pimco Moditiesplus 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 Moditiesplus 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 Moditiesplus Strategy and Western Asset Diversified, you can compare the effects of market volatilities on Pimco Moditiesplus 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 Moditiesplus with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Moditiesplus and Western Asset.
Diversification Opportunities for Pimco Moditiesplus and Western Asset
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pimco and Western is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Moditiesplus Strategy and Western Asset Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Diversified and Pimco Moditiesplus 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 Moditiesplus Strategy 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 Diversified has no effect on the direction of Pimco Moditiesplus i.e., Pimco Moditiesplus and Western Asset go up and down completely randomly.
Pair Corralation between Pimco Moditiesplus and Western Asset
Assuming the 90 days horizon Pimco Moditiesplus Strategy is expected to generate 2.39 times more return on investment than Western Asset. However, Pimco Moditiesplus is 2.39 times more volatile than Western Asset Diversified. It trades about 0.12 of its potential returns per unit of risk. Western Asset Diversified is currently generating about 0.05 per unit of risk. If you would invest 521.00 in Pimco Moditiesplus Strategy on September 12, 2024 and sell it today you would earn a total of 8.00 from holding Pimco Moditiesplus Strategy or generate 1.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Moditiesplus Strategy vs. Western Asset Diversified
Performance |
| Timeline |
| Pimco Moditiesplus |
| Western Asset Diversified |
Pimco Moditiesplus and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Moditiesplus and Western Asset
The main advantage of trading using opposite Pimco Moditiesplus and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Moditiesplus 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.The idea behind Pimco Moditiesplus Strategy and Western Asset Diversified pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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