Correlation Between Pimco Income and Prudential Short-term
Can any of the company-specific risk be diversified away by investing in both Pimco Income and Prudential Short-term 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 Short-term 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 Short Term Porate, you can compare the effects of market volatilities on Pimco Income and Prudential Short-term 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 Short-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Income and Prudential Short-term.
Diversification Opportunities for Pimco Income and Prudential Short-term
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between PIMCO and Prudential is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Income Fund and Prudential Short Term Porate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Short Term 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 Short-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Short Term has no effect on the direction of Pimco Income i.e., Pimco Income and Prudential Short-term go up and down completely randomly.
Pair Corralation between Pimco Income and Prudential Short-term
Assuming the 90 days horizon Pimco Income Fund is expected to generate 1.49 times more return on investment than Prudential Short-term. However, Pimco Income is 1.49 times more volatile than Prudential Short Term Porate. It trades about 0.14 of its potential returns per unit of risk. Prudential Short Term Porate is currently generating about 0.18 per unit of risk. If you would invest 1,025 in Pimco Income Fund on September 1, 2024 and sell it today you would earn a total of 41.00 from holding Pimco Income Fund or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Pimco Income Fund vs. Prudential Short Term Porate
Performance |
| Timeline |
| Pimco Income |
| Prudential Short Term |
Pimco Income and Prudential Short-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Income and Prudential Short-term
The main advantage of trading using opposite Pimco Income and Prudential Short-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Income position performs unexpectedly, Prudential Short-term 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 Short-term will offset losses from the drop in Prudential Short-term'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 |
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 CEOs Directory module to screen CEOs from public companies around the world.
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