Correlation Between Guggenheim High and Pimco Income
Can any of the company-specific risk be diversified away by investing in both Guggenheim High 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 Guggenheim High and Pimco Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guggenheim High Yield and Pimco Income Fund, you can compare the effects of market volatilities on Guggenheim High 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 Guggenheim High with a short position of Pimco Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guggenheim High and Pimco Income.
Diversification Opportunities for Guggenheim High and Pimco Income
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Guggenheim and Pimco is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim High Yield and Pimco Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Income and Guggenheim 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 Guggenheim High Yield 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 Guggenheim High i.e., Guggenheim High and Pimco Income go up and down completely randomly.
Pair Corralation between Guggenheim High and Pimco Income
Assuming the 90 days horizon Guggenheim High Yield is expected to generate 0.71 times more return on investment than Pimco Income. However, Guggenheim High Yield is 1.41 times less risky than Pimco Income. It trades about 0.18 of its potential returns per unit of risk. Pimco Income Fund is currently generating about 0.11 per unit of risk. If you would invest 935.00 in Guggenheim High Yield on September 12, 2024 and sell it today you would earn a total of 79.00 from holding Guggenheim High Yield or generate 8.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guggenheim High Yield vs. Pimco Income Fund
Performance |
| Timeline |
| Guggenheim High Yield |
| Pimco Income |
Guggenheim High and Pimco Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guggenheim High and Pimco Income
The main advantage of trading using opposite Guggenheim High and Pimco Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guggenheim High 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.The idea behind Guggenheim High Yield and Pimco Income Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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