Correlation Between Pimco International and Pimco Income
Can any of the company-specific risk be diversified away by investing in both Pimco International 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 International 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 International Bond and Pimco Income Fund, you can compare the effects of market volatilities on Pimco International 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 International with a short position of Pimco Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco International and Pimco Income.
Diversification Opportunities for Pimco International and Pimco Income
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pimco and Pimco is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Pimco International 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 International 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 International 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 International i.e., Pimco International and Pimco Income go up and down completely randomly.
Pair Corralation between Pimco International and Pimco Income
Assuming the 90 days horizon Pimco International Bond is expected to generate 2.22 times more return on investment than Pimco Income. However, Pimco International is 2.22 times more volatile than Pimco Income Fund. It trades about 0.15 of its potential returns per unit of risk. Pimco Income Fund is currently generating about -0.32 per unit of risk. If you would invest 754.00 in Pimco International Bond on January 13, 2025 and sell it today you would earn a total of 16.00 from holding Pimco International Bond or generate 2.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco International Bond vs. Pimco Income Fund
Performance |
| Timeline |
| Pimco International Bond |
| Pimco Income |
Pimco International and Pimco Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco International and Pimco Income
The main advantage of trading using opposite Pimco International and Pimco Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco International 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 International vs. Qs Small Capitalization | Pimco International vs. Touchstone Small Cap | Pimco International vs. Foundry Partners Fundamental | Pimco International vs. Small Midcap Dividend Income |
| Pimco Income vs. Tweedy Browne Global | Pimco Income vs. Scharf Global Opportunity | Pimco Income vs. Investec Global Franchise | Pimco Income vs. Blue Current Global |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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