Correlation Between Pimco Income and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Pimco Income and Lord Abbett 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 Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Income Fund and Lord Abbett Bond, you can compare the effects of market volatilities on Pimco Income and Lord Abbett 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 Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Income and Lord Abbett.
Diversification Opportunities for Pimco Income and Lord Abbett
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PIMCO and Lord is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Income Fund and Lord Abbett Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Bond 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 Fund are associated (or correlated) with Lord Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lord Abbett Bond has no effect on the direction of Pimco Income i.e., Pimco Income and Lord Abbett go up and down completely randomly.
Pair Corralation between Pimco Income and Lord Abbett
Assuming the 90 days horizon Pimco Income is expected to generate 1.13 times less return on investment than Lord Abbett. In addition to that, Pimco Income is 1.16 times more volatile than Lord Abbett Bond. It trades about 0.1 of its total potential returns per unit of risk. Lord Abbett Bond is currently generating about 0.13 per unit of volatility. If you would invest 638.00 in Lord Abbett Bond on August 31, 2024 and sell it today you would earn a total of 86.00 from holding Lord Abbett Bond or generate 13.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Income Fund vs. Lord Abbett Bond
Performance |
| Timeline |
| Pimco Income |
| Lord Abbett Bond |
Pimco Income and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Income and Lord Abbett
The main advantage of trading using opposite Pimco Income and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Income position performs unexpectedly, Lord Abbett 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 Lord Abbett will offset losses from the drop in Lord Abbett's long position.| Pimco Income vs. Doubleline Total Return | Pimco Income vs. Investment Grade Porate | Pimco Income vs. Pimco Foreign Bond | Pimco Income vs. Metropolitan West Total |
| Lord Abbett vs. Dws Government Money | Lord Abbett vs. Virtus Seix Government | Lord Abbett vs. Franklin Government Money | Lord Abbett vs. Dunham Porategovernment Bond |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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