Correlation Between Pimco Rae and Municipal Bond
Can any of the company-specific risk be diversified away by investing in both Pimco Rae and Municipal Bond 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 Rae and Municipal Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Rae Worldwide and Municipal Bond Fund, you can compare the effects of market volatilities on Pimco Rae and Municipal Bond 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 Rae with a short position of Municipal Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Rae and Municipal Bond.
Diversification Opportunities for Pimco Rae and Municipal Bond
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pimco and Municipal is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Rae Worldwide and Municipal Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Municipal Bond and Pimco Rae 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 Rae Worldwide are associated (or correlated) with Municipal Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Municipal Bond has no effect on the direction of Pimco Rae i.e., Pimco Rae and Municipal Bond go up and down completely randomly.
Pair Corralation between Pimco Rae and Municipal Bond
Assuming the 90 days horizon Pimco Rae Worldwide is expected to generate 1.03 times more return on investment than Municipal Bond. However, Pimco Rae is 1.03 times more volatile than Municipal Bond Fund. It trades about 0.14 of its potential returns per unit of risk. Municipal Bond Fund is currently generating about 0.08 per unit of risk. If you would invest 810.00 in Pimco Rae Worldwide on August 27, 2024 and sell it today you would earn a total of 8.00 from holding Pimco Rae Worldwide or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Rae Worldwide vs. Municipal Bond Fund
Performance |
| Timeline |
| Pimco Rae Worldwide |
| Municipal Bond |
Pimco Rae and Municipal Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Rae and Municipal Bond
The main advantage of trading using opposite Pimco Rae and Municipal Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Rae position performs unexpectedly, Municipal Bond 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 Municipal Bond will offset losses from the drop in Municipal Bond's long position.| Pimco Rae vs. Icon Financial Fund | Pimco Rae vs. Financials Ultrasector Profund | Pimco Rae vs. Royce Global Financial | Pimco Rae vs. Davis Financial Fund |
| Municipal Bond vs. Pimco Rae Worldwide | Municipal Bond vs. Pimco Rae Worldwide | Municipal Bond vs. Pimco Rae Worldwide | Municipal Bond vs. Pimco Rae Worldwide |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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