Correlation Between Pimco New and Western Asset
Can any of the company-specific risk be diversified away by investing in both Pimco New and Western Asset 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 New and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco New York and Western Asset Municipal, you can compare the effects of market volatilities on Pimco New and Western Asset 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 New with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco New and Western Asset.
Diversification Opportunities for Pimco New and Western Asset
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pimco and Western is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Pimco New York and Western Asset Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Municipal and Pimco New 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 New York are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Municipal has no effect on the direction of Pimco New i.e., Pimco New and Western Asset go up and down completely randomly.
Pair Corralation between Pimco New and Western Asset
Considering the 90-day investment horizon Pimco New is expected to generate 1.14 times less return on investment than Western Asset. In addition to that, Pimco New is 1.19 times more volatile than Western Asset Municipal. It trades about 0.09 of its total potential returns per unit of risk. Western Asset Municipal is currently generating about 0.12 per unit of volatility. If you would invest 578.00 in Western Asset Municipal on August 25, 2024 and sell it today you would earn a total of 127.00 from holding Western Asset Municipal or generate 21.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco New York vs. Western Asset Municipal
Performance |
| Timeline |
| Pimco New York |
| Western Asset Municipal |
Pimco New and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco New and Western Asset
The main advantage of trading using opposite Pimco New and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco New position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Pimco New vs. MFS Investment Grade | Pimco New vs. Eaton Vance National | Pimco New vs. Blackrock Muniyield Quality | Pimco New vs. DTF Tax Free |
| Western Asset vs. MFS Investment Grade | Western Asset vs. Eaton Vance National | Western Asset vs. Blackrock Muniyield Quality | Western Asset vs. DTF Tax Free |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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