Correlation Between Pimco Income and Metropolitan West
Can any of the company-specific risk be diversified away by investing in both Pimco Income and Metropolitan West 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 Metropolitan West 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 Metropolitan West Total, you can compare the effects of market volatilities on Pimco Income and Metropolitan West 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 Metropolitan West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Income and Metropolitan West.
Diversification Opportunities for Pimco Income and Metropolitan West
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pimco and Metropolitan is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Income Fund and Metropolitan West Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan West Total 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 Metropolitan West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan West Total has no effect on the direction of Pimco Income i.e., Pimco Income and Metropolitan West go up and down completely randomly.
Pair Corralation between Pimco Income and Metropolitan West
Assuming the 90 days horizon Pimco Income Fund is expected to generate 0.59 times more return on investment than Metropolitan West. However, Pimco Income Fund is 1.71 times less risky than Metropolitan West. It trades about 0.16 of its potential returns per unit of risk. Metropolitan West Total is currently generating about 0.05 per unit of risk. If you would invest 1,053 in Pimco Income Fund on August 29, 2024 and sell it today you would earn a total of 9.00 from holding Pimco Income Fund or generate 0.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Income Fund vs. Metropolitan West Total
Performance |
| Timeline |
| Pimco Income |
| Metropolitan West Total |
Pimco Income and Metropolitan West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Income and Metropolitan West
The main advantage of trading using opposite Pimco Income and Metropolitan West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Income position performs unexpectedly, Metropolitan West 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 Metropolitan West will offset losses from the drop in Metropolitan West'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 |
| Metropolitan West vs. Europacific Growth Fund | Metropolitan West vs. Templeton Global Bond | Metropolitan West vs. Mfs Value Fund | Metropolitan West vs. Mfs Emerging Markets |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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