Correlation Between Pimco International and Pimco Income
Can any of the company-specific risk be diversified away by investing in both Pimco International and Pimco Income 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 International and Pimco Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco International Stocksplus and Pimco Income Fund, you can compare the effects of market volatilities on Pimco International and Pimco Income 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 International with a short position of Pimco Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco International and Pimco Income.
Diversification Opportunities for Pimco International and Pimco Income
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Pimco and Pimco is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Pimco International Stocksplus and Pimco Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Income and Pimco International 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 International Stocksplus are associated (or correlated) with Pimco Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Income has no effect on the direction of Pimco International i.e., Pimco International and Pimco Income go up and down completely randomly.
Pair Corralation between Pimco International and Pimco Income
Assuming the 90 days horizon Pimco International Stocksplus is expected to under-perform the Pimco Income. In addition to that, Pimco International is 2.7 times more volatile than Pimco Income Fund. It trades about -0.07 of its total potential returns per unit of risk. Pimco Income Fund is currently generating about 0.14 per unit of volatility. If you would invest 1,054 in Pimco Income Fund on August 29, 2024 and sell it today you would earn a total of 8.00 from holding Pimco Income Fund or generate 0.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco International Stocksplus vs. Pimco Income Fund
Performance |
| Timeline |
| Pimco International |
| Pimco Income |
Pimco International and Pimco Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco International and Pimco Income
The main advantage of trading using opposite Pimco International and Pimco Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco International position performs unexpectedly, Pimco Income 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 Pimco Income will offset losses from the drop in Pimco Income's long position.The idea behind Pimco International Stocksplus and Pimco Income Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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