Correlation Between Pimco Global and Nuveen Preferred
Can any of the company-specific risk be diversified away by investing in both Pimco Global and Nuveen Preferred 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 Global and Nuveen Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Global Multi Asset and Nuveen Preferred Income, you can compare the effects of market volatilities on Pimco Global and Nuveen Preferred 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 Global with a short position of Nuveen Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Global and Nuveen Preferred.
Diversification Opportunities for Pimco Global and Nuveen Preferred
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pimco and Nuveen is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Global Multi Asset and Nuveen Preferred Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Preferred Income and Pimco Global 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 Global Multi Asset are associated (or correlated) with Nuveen Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Preferred Income has no effect on the direction of Pimco Global i.e., Pimco Global and Nuveen Preferred go up and down completely randomly.
Pair Corralation between Pimco Global and Nuveen Preferred
Assuming the 90 days horizon Pimco Global is expected to generate 1.16 times less return on investment than Nuveen Preferred. But when comparing it to its historical volatility, Pimco Global Multi Asset is 1.76 times less risky than Nuveen Preferred. It trades about 0.1 of its potential returns per unit of risk. Nuveen Preferred Income is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 623.00 in Nuveen Preferred Income on September 3, 2024 and sell it today you would earn a total of 185.00 from holding Nuveen Preferred Income or generate 29.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Global Multi Asset vs. Nuveen Preferred Income
Performance |
| Timeline |
| Pimco Global Multi |
| Nuveen Preferred Income |
Pimco Global and Nuveen Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Global and Nuveen Preferred
The main advantage of trading using opposite Pimco Global and Nuveen Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Global position performs unexpectedly, Nuveen Preferred 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 Nuveen Preferred will offset losses from the drop in Nuveen Preferred's long position.| Pimco Global vs. Barings Emerging Markets | Pimco Global vs. Legg Mason Partners | Pimco Global vs. Calamos Market Neutral | Pimco Global vs. Mondrian Emerging Markets |
| Nuveen Preferred vs. Blackrock Floating Rate | Nuveen Preferred vs. Flaherty Crumrine Preferred | Nuveen Preferred vs. Western Asset Emerging | Nuveen Preferred vs. Doubleline Income Solutions |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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