Correlation Between Pimco New and Pimco California
Can any of the company-specific risk be diversified away by investing in both Pimco New 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 New 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 New York and Pimco California Municipal, you can compare the effects of market volatilities on Pimco New 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 New with a short position of Pimco California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco New and Pimco California.
Diversification Opportunities for Pimco New and Pimco California
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pimco and Pimco is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Pimco New York 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 New 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 New York 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 New i.e., Pimco New and Pimco California go up and down completely randomly.
Pair Corralation between Pimco New and Pimco California
Considering the 90-day investment horizon Pimco New York is expected to generate 1.06 times more return on investment than Pimco California. However, Pimco New is 1.06 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 -0.07 per unit of risk. If you would invest 739.00 in Pimco New York on August 31, 2024 and sell it today you would earn a total of 8.00 from holding Pimco New York or generate 1.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco New York vs. Pimco California Municipal
Performance |
| Timeline |
| Pimco New York |
| Pimco California Mun |
Pimco New and Pimco California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco New and Pimco California
The main advantage of trading using opposite Pimco New and Pimco California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco New 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 New vs. Pimco New York | Pimco New vs. Pimco New York | Pimco New vs. Pimco California Municipal | Pimco New vs. Pimco Municipal Income |
| Pimco California vs. MFS Investment Grade | Pimco California vs. Eaton Vance Municipal | Pimco California vs. DTF Tax Free | Pimco California vs. HUMANA INC |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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