Correlation Between Municipal Bond and Pimco All
Can any of the company-specific risk be diversified away by investing in both Municipal Bond and Pimco All 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 Municipal Bond and Pimco All into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Municipal Bond Fund and Pimco All Asset, you can compare the effects of market volatilities on Municipal Bond and Pimco All 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 Municipal Bond with a short position of Pimco All. Check out your portfolio center. Please also check ongoing floating volatility patterns of Municipal Bond and Pimco All.
Diversification Opportunities for Municipal Bond and Pimco All
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Municipal and Pimco is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Municipal Bond Fund and Pimco All Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco All Asset and Municipal Bond 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 Municipal Bond Fund are associated (or correlated) with Pimco All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco All Asset has no effect on the direction of Municipal Bond i.e., Municipal Bond and Pimco All go up and down completely randomly.
Pair Corralation between Municipal Bond and Pimco All
Assuming the 90 days horizon Municipal Bond is expected to generate 1.23 times less return on investment than Pimco All. But when comparing it to its historical volatility, Municipal Bond Fund is 1.66 times less risky than Pimco All. It trades about 0.09 of its potential returns per unit of risk. Pimco All Asset is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 996.00 in Pimco All Asset on August 28, 2024 and sell it today you would earn a total of 138.00 from holding Pimco All Asset or generate 13.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Municipal Bond Fund vs. Pimco All Asset
Performance |
| Timeline |
| Municipal Bond |
| Pimco All Asset |
Municipal Bond and Pimco All Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Municipal Bond and Pimco All
The main advantage of trading using opposite Municipal Bond and Pimco All positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Municipal Bond position performs unexpectedly, Pimco All 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 All will offset losses from the drop in Pimco All's long position.| Municipal Bond vs. Pimco Rae Worldwide | Municipal Bond vs. Pimco Rae Worldwide | Municipal Bond vs. Pimco Rae Worldwide | Municipal Bond vs. Pimco Rae Worldwide |
| Pimco All vs. Pimco Rae Worldwide | Pimco All vs. Pimco Rae Worldwide | Pimco All vs. Pimco Rae Worldwide | Pimco All vs. Pimco Rae Worldwide |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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