Correlation Between Pimco Income and Western Asset
Can any of the company-specific risk be diversified away by investing in both Pimco Income and Western Asset 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 Western Asset 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 Western Asset E, you can compare the effects of market volatilities on Pimco Income and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Income and Western Asset.
Diversification Opportunities for Pimco Income and Western Asset
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pimco and Western is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Income Fund and Western Asset E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset E 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset E has no effect on the direction of Pimco Income i.e., Pimco Income and Western Asset go up and down completely randomly.
Pair Corralation between Pimco Income and Western Asset
Assuming the 90 days horizon Pimco Income Fund is expected to generate 0.58 times more return on investment than Western Asset. However, Pimco Income Fund is 1.71 times less risky than Western Asset. It trades about -0.1 of its potential returns per unit of risk. Western Asset E is currently generating about -0.15 per unit of risk. If you would invest 1,074 in Pimco Income Fund on August 30, 2024 and sell it today you would lose (10.00) from holding Pimco Income Fund or give up 0.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Income Fund vs. Western Asset E
Performance |
| Timeline |
| Pimco Income |
| Western Asset E |
Pimco Income and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Income and Western Asset
The main advantage of trading using opposite Pimco Income and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Income position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Pimco Income vs. Virtus Seix Government | Pimco Income vs. Us Government Plus | Pimco Income vs. Dws Government Money | Pimco Income vs. Us Government Securities |
| Western Asset vs. Pimco Income Fund | Western Asset vs. HUMANA INC | Western Asset vs. Aquagold International | Western Asset vs. Barloworld Ltd ADR |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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