Correlation Between Pimco Rae and Ab Municipal
Can any of the company-specific risk be diversified away by investing in both Pimco Rae and Ab 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 Rae and Ab Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Rae Fundamental and Ab Municipal Bond, you can compare the effects of market volatilities on Pimco Rae and Ab 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 Rae with a short position of Ab Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Rae and Ab Municipal.
Diversification Opportunities for Pimco Rae and Ab Municipal
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Pimco and AUNTX is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Rae Fundamental and Ab Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Municipal Bond and Pimco Rae 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 Rae Fundamental are associated (or correlated) with Ab Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Municipal Bond has no effect on the direction of Pimco Rae i.e., Pimco Rae and Ab Municipal go up and down completely randomly.
Pair Corralation between Pimco Rae and Ab Municipal
Assuming the 90 days horizon Pimco Rae is expected to generate 5.72 times less return on investment than Ab Municipal. In addition to that, Pimco Rae is 5.5 times more volatile than Ab Municipal Bond. It trades about 0.01 of its total potential returns per unit of risk. Ab Municipal Bond is currently generating about 0.32 per unit of volatility. If you would invest 1,063 in Ab Municipal Bond on November 4, 2024 and sell it today you would earn a total of 9.00 from holding Ab Municipal Bond or generate 0.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Rae Fundamental vs. Ab Municipal Bond
Performance |
| Timeline |
| Pimco Rae Fundamental |
| Ab Municipal Bond |
Pimco Rae and Ab Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Rae and Ab Municipal
The main advantage of trading using opposite Pimco Rae and Ab Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Rae position performs unexpectedly, Ab 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 Ab Municipal will offset losses from the drop in Ab Municipal's long position.| Pimco Rae vs. Hartford Municipal Short | Pimco Rae vs. Baird Quality Intermediate | Pimco Rae vs. Legg Mason Partners | Pimco Rae vs. Pace Municipal Fixed |
| Ab Municipal vs. Nuveen Core Equity | Ab Municipal vs. Gmo Global Equity | Ab Municipal vs. Dreyfusstandish Global Fixed | Ab Municipal vs. Transamerica International Equity |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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