Correlation Between Pimco High and Pace Municipal
Can any of the company-specific risk be diversified away by investing in both Pimco High and Pace Municipal 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 High and Pace Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco High Yield and Pace Municipal Fixed, you can compare the effects of market volatilities on Pimco High and Pace Municipal 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 High with a short position of Pace Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco High and Pace Municipal.
Diversification Opportunities for Pimco High and Pace Municipal
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Pimco and Pace is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Pimco High Yield and Pace Municipal Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Municipal Fixed and Pimco High 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 High Yield are associated (or correlated) with Pace Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Municipal Fixed has no effect on the direction of Pimco High i.e., Pimco High and Pace Municipal go up and down completely randomly.
Pair Corralation between Pimco High and Pace Municipal
Assuming the 90 days horizon Pimco High Yield is expected to generate 1.62 times more return on investment than Pace Municipal. However, Pimco High is 1.62 times more volatile than Pace Municipal Fixed. It trades about 0.09 of its potential returns per unit of risk. Pace Municipal Fixed is currently generating about 0.07 per unit of risk. If you would invest 763.00 in Pimco High Yield on September 3, 2024 and sell it today you would earn a total of 102.00 from holding Pimco High Yield or generate 13.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco High Yield vs. Pace Municipal Fixed
Performance |
| Timeline |
| Pimco High Yield |
| Pace Municipal Fixed |
Pimco High and Pace Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco High and Pace Municipal
The main advantage of trading using opposite Pimco High and Pace Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco High position performs unexpectedly, Pace Municipal 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 Pace Municipal will offset losses from the drop in Pace Municipal's long position.| Pimco High vs. Pimco Funds | Pimco High vs. Pimco Rae Worldwide | Pimco High vs. Pimco New York | Pimco High vs. Pimco New York |
| Pace Municipal vs. Ab Bond Inflation | Pace Municipal vs. Aqr Managed Futures | Pace Municipal vs. Tiaa Cref Inflation Linked Bond | Pace Municipal vs. Aqr Managed Futures |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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