Correlation Between Municipal Bond and Pimco Extended
Can any of the company-specific risk be diversified away by investing in both Municipal Bond and Pimco Extended 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 Extended 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 Extended Duration, you can compare the effects of market volatilities on Municipal Bond and Pimco Extended 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 Extended. Check out your portfolio center. Please also check ongoing floating volatility patterns of Municipal Bond and Pimco Extended.
Diversification Opportunities for Municipal Bond and Pimco Extended
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Municipal and Pimco is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Municipal Bond Fund and Pimco Extended Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Extended Duration 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 Extended. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Extended Duration has no effect on the direction of Municipal Bond i.e., Municipal Bond and Pimco Extended go up and down completely randomly.
Pair Corralation between Municipal Bond and Pimco Extended
Assuming the 90 days horizon Municipal Bond Fund is expected to generate 0.17 times more return on investment than Pimco Extended. However, Municipal Bond Fund is 5.73 times less risky than Pimco Extended. It trades about 0.09 of its potential returns per unit of risk. Pimco Extended Duration is currently generating about 0.01 per unit of risk. If you would invest 924.00 in Municipal Bond Fund on September 1, 2024 and sell it today you would earn a total of 33.00 from holding Municipal Bond Fund or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Municipal Bond Fund vs. Pimco Extended Duration
Performance |
| Timeline |
| Municipal Bond |
| Pimco Extended Duration |
Municipal Bond and Pimco Extended Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Municipal Bond and Pimco Extended
The main advantage of trading using opposite Municipal Bond and Pimco Extended positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Municipal Bond position performs unexpectedly, Pimco Extended 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 Extended will offset losses from the drop in Pimco Extended's long position.| Municipal Bond vs. Old Westbury Short Term | Municipal Bond vs. Quantitative Longshort Equity | Municipal Bond vs. Aqr Sustainable Long Short | Municipal Bond vs. Astor Longshort Fund |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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