Correlation Between Pimco Income and American High-income
Can any of the company-specific risk be diversified away by investing in both Pimco Income and American High-income 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 Income and American High-income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Income Strategy and American High Income Municipal, you can compare the effects of market volatilities on Pimco Income and American High-income 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 Income with a short position of American High-income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Income and American High-income.
Diversification Opportunities for Pimco Income and American High-income
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pimco and American is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Income Strategy and American High Income Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American High Income and Pimco Income 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 Income Strategy are associated (or correlated) with American High-income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American High Income has no effect on the direction of Pimco Income i.e., Pimco Income and American High-income go up and down completely randomly.
Pair Corralation between Pimco Income and American High-income
Considering the 90-day investment horizon Pimco Income is expected to generate 1.44 times less return on investment than American High-income. In addition to that, Pimco Income is 1.13 times more volatile than American High Income Municipal. It trades about 0.12 of its total potential returns per unit of risk. American High Income Municipal is currently generating about 0.2 per unit of volatility. If you would invest 1,536 in American High Income Municipal on September 2, 2024 and sell it today you would earn a total of 21.00 from holding American High Income Municipal or generate 1.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Income Strategy vs. American High Income Municipal
Performance |
| Timeline |
| Pimco Income Strategy |
| American High Income |
Pimco Income and American High-income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Income and American High-income
The main advantage of trading using opposite Pimco Income and American High-income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Income position performs unexpectedly, American High-income 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 American High-income will offset losses from the drop in American High-income's long position.| Pimco Income vs. Pcm Fund | Pimco Income vs. Pimco Corporate Income | Pimco Income vs. Pimco Global Stocksplus | Pimco Income vs. Pimco High Income |
| American High-income vs. Maryland Tax Free Bond | American High-income vs. T Rowe Price | American High-income vs. Versatile Bond Portfolio | American High-income vs. Blrc Sgy Mnp |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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