Correlation Between Pimco Incme and American Funds
Can any of the company-specific risk be diversified away by investing in both Pimco Incme and American Funds 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 Incme and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Incme Fund and American Funds Multi Sector, you can compare the effects of market volatilities on Pimco Incme and American Funds 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 Incme with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Incme and American Funds.
Diversification Opportunities for Pimco Incme and American Funds
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pimco and American is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Incme Fund and American Funds Multi Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Multi and Pimco Incme 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 Incme Fund are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Multi has no effect on the direction of Pimco Incme i.e., Pimco Incme and American Funds go up and down completely randomly.
Pair Corralation between Pimco Incme and American Funds
Assuming the 90 days horizon Pimco Incme is expected to generate 1.28 times less return on investment than American Funds. In addition to that, Pimco Incme is 1.01 times more volatile than American Funds Multi Sector. It trades about 0.12 of its total potential returns per unit of risk. American Funds Multi Sector is currently generating about 0.16 per unit of volatility. If you would invest 818.00 in American Funds Multi Sector on September 12, 2024 and sell it today you would earn a total of 133.00 from holding American Funds Multi Sector or generate 16.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Incme Fund vs. American Funds Multi Sector
Performance |
| Timeline |
| Pimco Incme Fund |
| American Funds Multi |
Pimco Incme and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Incme and American Funds
The main advantage of trading using opposite Pimco Incme and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Incme position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Pimco Incme vs. Pimco Income Fund | Pimco Incme vs. Pimco Income Fund | Pimco Incme vs. Pimco Income Fund | Pimco Incme vs. Pimco Income Fund |
| American Funds vs. Pimco Income Fund | American Funds vs. Pimco Income Fund | American Funds vs. Pimco Incme Fund | American Funds vs. Pimco Income Fund |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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