Correlation Between Pimco Diversified and Western Asset
Can any of the company-specific risk be diversified away by investing in both Pimco Diversified 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 Diversified 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 Diversified Income and Western Asset Intermediate, you can compare the effects of market volatilities on Pimco Diversified 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 Diversified with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Diversified and Western Asset.
Diversification Opportunities for Pimco Diversified and Western Asset
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pimco and Western is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Diversified Income and Western Asset Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Interm and Pimco Diversified 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 Diversified Income 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 Interm has no effect on the direction of Pimco Diversified i.e., Pimco Diversified and Western Asset go up and down completely randomly.
Pair Corralation between Pimco Diversified and Western Asset
Assuming the 90 days horizon Pimco Diversified is expected to generate 1.07 times less return on investment than Western Asset. But when comparing it to its historical volatility, Pimco Diversified Income is 1.43 times less risky than Western Asset. It trades about 0.22 of its potential returns per unit of risk. Western Asset Intermediate is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 815.00 in Western Asset Intermediate on August 31, 2024 and sell it today you would earn a total of 9.00 from holding Western Asset Intermediate or generate 1.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Diversified Income vs. Western Asset Intermediate
Performance |
| Timeline |
| Pimco Diversified Income |
| Western Asset Interm |
Pimco Diversified and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Diversified and Western Asset
The main advantage of trading using opposite Pimco Diversified and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Diversified 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 Diversified vs. Dodge Global Stock | Pimco Diversified vs. Scharf Global Opportunity | Pimco Diversified vs. Wisdomtree Siegel Global | Pimco Diversified vs. T Rowe Price |
| Western Asset vs. Delaware Limited Term Diversified | Western Asset vs. Jhancock Diversified Macro | Western Asset vs. Blackrock Conservative Prprdptfinstttnl | Western Asset vs. Pimco Diversified Income |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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