Correlation Between Pimco High and Municipal Bond
Can any of the company-specific risk be diversified away by investing in both Pimco High 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 High 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 High Yield and Municipal Bond Fund, you can compare the effects of market volatilities on Pimco High 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 High with a short position of Municipal Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco High and Municipal Bond.
Diversification Opportunities for Pimco High and Municipal Bond
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pimco and Municipal is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Pimco High Yield 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 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 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 High i.e., Pimco High and Municipal Bond go up and down completely randomly.
Pair Corralation between Pimco High and Municipal Bond
Assuming the 90 days horizon Pimco High is expected to generate 2.93 times less return on investment than Municipal Bond. In addition to that, Pimco High is 1.09 times more volatile than Municipal Bond Fund. It trades about 0.01 of its total potential returns per unit of risk. Municipal Bond Fund is currently generating about 0.05 per unit of volatility. If you would invest 950.00 in Municipal Bond Fund on September 12, 2024 and sell it today you would earn a total of 7.00 from holding Municipal Bond Fund or generate 0.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco High Yield vs. Municipal Bond Fund
Performance |
| Timeline |
| Pimco High Yield |
| Municipal Bond |
Pimco High and Municipal Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco High and Municipal Bond
The main advantage of trading using opposite Pimco High and Municipal Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco High 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 High vs. Pace Smallmedium Growth | Pimco High vs. L Abbett Growth | Pimco High vs. Champlain Mid Cap | Pimco High vs. Chase Growth Fund |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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