Correlation Between Pimco Municipal and Pimco California
Can any of the company-specific risk be diversified away by investing in both Pimco Municipal and Pimco California 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 Municipal and Pimco California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Municipal Income and Pimco California Municipal, you can compare the effects of market volatilities on Pimco Municipal and Pimco California 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 Municipal with a short position of Pimco California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Municipal and Pimco California.
Diversification Opportunities for Pimco Municipal and Pimco California
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pimco and Pimco is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Municipal Income and Pimco California Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco California Mun and Pimco Municipal 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 Municipal Income are associated (or correlated) with Pimco California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco California Mun has no effect on the direction of Pimco Municipal i.e., Pimco Municipal and Pimco California go up and down completely randomly.
Pair Corralation between Pimco Municipal and Pimco California
Considering the 90-day investment horizon Pimco Municipal Income is expected to generate 1.54 times more return on investment than Pimco California. However, Pimco Municipal is 1.54 times more volatile than Pimco California Municipal. It trades about 0.08 of its potential returns per unit of risk. Pimco California Municipal is currently generating about 0.1 per unit of risk. If you would invest 825.00 in Pimco Municipal Income on September 2, 2024 and sell it today you would earn a total of 63.00 from holding Pimco Municipal Income or generate 7.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Municipal Income vs. Pimco California Municipal
Performance |
| Timeline |
| Pimco Municipal Income |
| Pimco California Mun |
Pimco Municipal and Pimco California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Municipal and Pimco California
The main advantage of trading using opposite Pimco Municipal and Pimco California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Municipal position performs unexpectedly, Pimco California 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 California will offset losses from the drop in Pimco California's long position.| Pimco Municipal vs. Pimco Municipal Income | Pimco Municipal vs. Nuveen Municipal High | Pimco Municipal vs. Nuveen Amt Free Municipal | Pimco Municipal vs. Pimco New York |
| Pimco California vs. Pimco California Municipal | Pimco California vs. Nuveen California Amt | Pimco California vs. Eaton Vance California | Pimco California vs. Invesco California Value |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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