Correlation Between Pimco Income and Prudential Total
Can any of the company-specific risk be diversified away by investing in both Pimco Income and Prudential Total 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 Prudential Total 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 Prudential Total Return, you can compare the effects of market volatilities on Pimco Income and Prudential Total 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 Prudential Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Income and Prudential Total.
Diversification Opportunities for Pimco Income and Prudential Total
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pimco and Prudential is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Income Fund and Prudential Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Total Return 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 Prudential Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Total Return has no effect on the direction of Pimco Income i.e., Pimco Income and Prudential Total go up and down completely randomly.
Pair Corralation between Pimco Income and Prudential Total
Assuming the 90 days horizon Pimco Income is expected to generate 1.21 times less return on investment than Prudential Total. But when comparing it to its historical volatility, Pimco Income Fund is 1.9 times less risky than Prudential Total. It trades about 0.33 of its potential returns per unit of risk. Prudential Total Return is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,192 in Prudential Total Return on September 13, 2024 and sell it today you would earn a total of 15.00 from holding Prudential Total Return or generate 1.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Income Fund vs. Prudential Total Return
Performance |
| Timeline |
| Pimco Income |
| Prudential Total Return |
Pimco Income and Prudential Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Income and Prudential Total
The main advantage of trading using opposite Pimco Income and Prudential Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Income position performs unexpectedly, Prudential Total 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 Prudential Total will offset losses from the drop in Prudential Total'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 |
| Prudential Total vs. Prudential High Yield | Prudential Total vs. Prudential Short Term Porate | Prudential Total vs. Pimco Incme Fund | Prudential Total vs. Pimco Income 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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