Correlation Between Pimco Floating and High Yield
Can any of the company-specific risk be diversified away by investing in both Pimco Floating and High Yield 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 Floating and High Yield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Floating Income and High Yield Fund, you can compare the effects of market volatilities on Pimco Floating and High Yield 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 Floating with a short position of High Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Floating and High Yield.
Diversification Opportunities for Pimco Floating and High Yield
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pimco and High is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Floating Income and High Yield Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Fund and Pimco Floating 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 Floating Income are associated (or correlated) with High Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Fund has no effect on the direction of Pimco Floating i.e., Pimco Floating and High Yield go up and down completely randomly.
Pair Corralation between Pimco Floating and High Yield
Assuming the 90 days horizon Pimco Floating is expected to generate 1.4 times less return on investment than High Yield. But when comparing it to its historical volatility, Pimco Floating Income is 1.28 times less risky than High Yield. It trades about 0.18 of its potential returns per unit of risk. High Yield Fund is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 770.00 in High Yield Fund on August 25, 2024 and sell it today you would earn a total of 37.00 from holding High Yield Fund or generate 4.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Pimco Floating Income vs. High Yield Fund
Performance |
| Timeline |
| Pimco Floating Income |
| High Yield Fund |
Pimco Floating and High Yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Floating and High Yield
The main advantage of trading using opposite Pimco Floating and High Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Floating position performs unexpectedly, High Yield 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 High Yield will offset losses from the drop in High Yield's long position.| Pimco Floating vs. Pimco Rae Worldwide | Pimco Floating vs. Pimco Rae Worldwide | Pimco Floating vs. Pimco Rae Worldwide | Pimco Floating vs. Pimco Rae Worldwide |
| High Yield vs. Pimco Rae Worldwide | High Yield vs. Pimco Rae Worldwide | High Yield vs. Pimco Rae Worldwide | High Yield 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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