Correlation Between Visa and Pimco Municipal
Can any of the company-specific risk be diversified away by investing in both Visa and Pimco 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 Visa and Pimco Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Pimco Municipal Income, you can compare the effects of market volatilities on Visa and Pimco 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 Visa with a short position of Pimco Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Pimco Municipal.
Diversification Opportunities for Visa and Pimco Municipal
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Visa and Pimco is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Pimco Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Municipal Income and Visa 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 Visa Class A are associated (or correlated) with Pimco Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Municipal Income has no effect on the direction of Visa i.e., Visa and Pimco Municipal go up and down completely randomly.
Pair Corralation between Visa and Pimco Municipal
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.3 times more return on investment than Pimco Municipal. However, Visa is 1.3 times more volatile than Pimco Municipal Income. It trades about 0.09 of its potential returns per unit of risk. Pimco Municipal Income is currently generating about 0.05 per unit of risk. If you would invest 25,387 in Visa Class A on September 2, 2024 and sell it today you would earn a total of 6,121 from holding Visa Class A or generate 24.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Pimco Municipal Income
Performance |
| Timeline |
| Visa Class A |
| Pimco Municipal Income |
Visa and Pimco Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Pimco Municipal
The main advantage of trading using opposite Visa and Pimco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Pimco 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 Pimco Municipal will offset losses from the drop in Pimco Municipal's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| Pimco Municipal vs. Pimco Municipal Income | Pimco Municipal vs. Nuveen Municipal High | Pimco Municipal vs. Nuveen Municipal Credit | Pimco Municipal vs. Nuveen Amt Free Municipal |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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