Correlation Between Pimco Income and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Pimco Income and Old Westbury 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 Old Westbury 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 Old Westbury Credit, you can compare the effects of market volatilities on Pimco Income and Old Westbury 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 Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Income and Old Westbury.
Diversification Opportunities for Pimco Income and Old Westbury
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pimco and Old is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Income Fund and Old Westbury Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Credit 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 Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Credit has no effect on the direction of Pimco Income i.e., Pimco Income and Old Westbury go up and down completely randomly.
Pair Corralation between Pimco Income and Old Westbury
Assuming the 90 days horizon Pimco Income is expected to generate 1.4 times less return on investment than Old Westbury. But when comparing it to its historical volatility, Pimco Income Fund is 1.69 times less risky than Old Westbury. It trades about 0.02 of its potential returns per unit of risk. Old Westbury Credit is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 801.00 in Old Westbury Credit on August 24, 2024 and sell it today you would earn a total of 1.00 from holding Old Westbury Credit or generate 0.12% 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. Old Westbury Credit
Performance |
| Timeline |
| Pimco Income |
| Old Westbury Credit |
Pimco Income and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Income and Old Westbury
The main advantage of trading using opposite Pimco Income and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Income position performs unexpectedly, Old Westbury 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 Old Westbury will offset losses from the drop in Old Westbury's long position.| Pimco Income vs. Aig Government Money | Pimco Income vs. Us Government Securities | Pimco Income vs. Virtus Seix Government | Pimco Income vs. Government Securities Fund |
| Old Westbury vs. Fidelity Capital Income | Old Westbury vs. American Century High | Old Westbury vs. Artisan High Income | Old Westbury vs. Lord Abbett High |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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