Correlation Between Pimco Income and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Pimco Income and Wells Fargo 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 Wells Fargo 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 Wells Fargo Strategic, you can compare the effects of market volatilities on Pimco Income and Wells Fargo 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 Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Income and Wells Fargo.
Diversification Opportunities for Pimco Income and Wells Fargo
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pimco and Wells is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Income Fund and Wells Fargo Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Strategic 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 Wells Fargo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wells Fargo Strategic has no effect on the direction of Pimco Income i.e., Pimco Income and Wells Fargo go up and down completely randomly.
Pair Corralation between Pimco Income and Wells Fargo
Assuming the 90 days horizon Pimco Income Fund is expected to generate 1.59 times more return on investment than Wells Fargo. However, Pimco Income is 1.59 times more volatile than Wells Fargo Strategic. It trades about 0.16 of its potential returns per unit of risk. Wells Fargo Strategic is currently generating about 0.14 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 | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Pimco Income Fund vs. Wells Fargo Strategic
Performance |
| Timeline |
| Pimco Income |
| Wells Fargo Strategic |
Pimco Income and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Income and Wells Fargo
The main advantage of trading using opposite Pimco Income and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Income position performs unexpectedly, Wells Fargo 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 Wells Fargo will offset losses from the drop in Wells Fargo'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 |
| Wells Fargo vs. Wells Fargo Advantage | Wells Fargo vs. Wells Fargo Advantage | Wells Fargo vs. Wells Fargo Advantage | Wells Fargo vs. Wells Fargo Advantage |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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