Correlation Between Pimco Income and Kensington Active
Can any of the company-specific risk be diversified away by investing in both Pimco Income and Kensington Active 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 Kensington Active 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 Kensington Active Advantage, you can compare the effects of market volatilities on Pimco Income and Kensington Active 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 Kensington Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Income and Kensington Active.
Diversification Opportunities for Pimco Income and Kensington Active
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pimco and Kensington is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Income Strategy and Kensington Active Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kensington Active 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 Kensington Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kensington Active has no effect on the direction of Pimco Income i.e., Pimco Income and Kensington Active go up and down completely randomly.
Pair Corralation between Pimco Income and Kensington Active
Considering the 90-day investment horizon Pimco Income Strategy is expected to generate 1.64 times more return on investment than Kensington Active. However, Pimco Income is 1.64 times more volatile than Kensington Active Advantage. It trades about 0.11 of its potential returns per unit of risk. Kensington Active Advantage is currently generating about 0.11 per unit of risk. If you would invest 586.00 in Pimco Income Strategy on September 3, 2024 and sell it today you would earn a total of 165.00 from holding Pimco Income Strategy or generate 28.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Income Strategy vs. Kensington Active Advantage
Performance |
| Timeline |
| Pimco Income Strategy |
| Kensington Active |
Pimco Income and Kensington Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Income and Kensington Active
The main advantage of trading using opposite Pimco Income and Kensington Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Income position performs unexpectedly, Kensington Active 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 Kensington Active will offset losses from the drop in Kensington Active'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 |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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