Correlation Between Pimco Foreign and Pimco Income
Can any of the company-specific risk be diversified away by investing in both Pimco Foreign and Pimco 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 Foreign and Pimco Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Foreign Bond and Pimco Income Fund, you can compare the effects of market volatilities on Pimco Foreign and Pimco 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 Foreign with a short position of Pimco Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Foreign and Pimco Income.
Diversification Opportunities for Pimco Foreign and Pimco Income
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Pimco and Pimco is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Foreign Bond and Pimco Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Income and Pimco Foreign 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 Foreign Bond are associated (or correlated) with Pimco Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Income has no effect on the direction of Pimco Foreign i.e., Pimco Foreign and Pimco Income go up and down completely randomly.
Pair Corralation between Pimco Foreign and Pimco Income
Assuming the 90 days horizon Pimco Foreign is expected to generate 1.18 times less return on investment than Pimco Income. But when comparing it to its historical volatility, Pimco Foreign Bond is 1.34 times less risky than Pimco Income. It trades about 0.13 of its potential returns per unit of risk. Pimco Income Fund is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 990.00 in Pimco Income Fund on September 2, 2024 and sell it today you would earn a total of 76.00 from holding Pimco Income Fund or generate 7.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Foreign Bond vs. Pimco Income Fund
Performance |
| Timeline |
| Pimco Foreign Bond |
| Pimco Income |
Pimco Foreign and Pimco Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Foreign and Pimco Income
The main advantage of trading using opposite Pimco Foreign and Pimco Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Foreign position performs unexpectedly, Pimco 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 Pimco Income will offset losses from the drop in Pimco Income's long position.| Pimco Foreign vs. Foreign Bond Fund | Pimco Foreign vs. Emerging Markets Bond | Pimco Foreign vs. High Yield Fund | Pimco Foreign vs. Low Duration Fund |
| Pimco Income vs. New World Fund | Pimco Income vs. Lord Abbett Short | Pimco Income vs. First Eagle Global | Pimco Income vs. Mfs Value Fund |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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