Correlation Between Low Duration and Pimco Income
Can any of the company-specific risk be diversified away by investing in both Low Duration and Pimco Income 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 Low Duration and Pimco Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Low Duration Fund and Pimco Income Fund, you can compare the effects of market volatilities on Low Duration and Pimco Income 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 Low Duration with a short position of Pimco Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Low Duration and Pimco Income.
Diversification Opportunities for Low Duration and Pimco Income
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Low and Pimco is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Low Duration Fund and Pimco Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Income and Low Duration 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 Low Duration Fund are associated (or correlated) with Pimco Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Income has no effect on the direction of Low Duration i.e., Low Duration and Pimco Income go up and down completely randomly.
Pair Corralation between Low Duration and Pimco Income
Assuming the 90 days horizon Low Duration is expected to generate 1.28 times less return on investment than Pimco Income. But when comparing it to its historical volatility, Low Duration Fund is 1.77 times less risky than Pimco Income. It trades about 0.1 of its potential returns per unit of risk. Pimco Income Fund is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 944.00 in Pimco Income Fund on October 20, 2024 and sell it today you would earn a total of 109.00 from holding Pimco Income Fund or generate 11.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Low Duration Fund vs. Pimco Income Fund
Performance |
| Timeline |
| Low Duration |
| Pimco Income |
Low Duration and Pimco Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Low Duration and Pimco Income
The main advantage of trading using opposite Low Duration and Pimco Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Low Duration position performs unexpectedly, Pimco Income 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 Income will offset losses from the drop in Pimco Income's long position.| Low Duration vs. Pimco Rae Worldwide | Low Duration vs. Pimco Rae Worldwide | Low Duration vs. Pimco Rae Worldwide | Low Duration vs. Pimco Rae Worldwide |
| Pimco Income vs. Transamerica Short Term Bond | Pimco Income vs. Blackrock Global Longshort | Pimco Income vs. Alpine Ultra Short | Pimco Income vs. Delaware Investments Ultrashort |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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