Correlation Between Western Asset and Pimco Investment
Can any of the company-specific risk be diversified away by investing in both Western Asset and Pimco Investment 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 Western Asset and Pimco Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset High and Pimco Investment Grade, you can compare the effects of market volatilities on Western Asset and Pimco Investment 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 Western Asset with a short position of Pimco Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Pimco Investment.
Diversification Opportunities for Western Asset and Pimco Investment
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Western and Pimco is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Pimco Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Investment Grade and Western Asset 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 Western Asset High are associated (or correlated) with Pimco Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Investment Grade has no effect on the direction of Western Asset i.e., Western Asset and Pimco Investment go up and down completely randomly.
Pair Corralation between Western Asset and Pimco Investment
Assuming the 90 days horizon Western Asset High is expected to generate 0.5 times more return on investment than Pimco Investment. However, Western Asset High is 1.98 times less risky than Pimco Investment. It trades about 0.24 of its potential returns per unit of risk. Pimco Investment Grade is currently generating about -0.09 per unit of risk. If you would invest 700.00 in Western Asset High on August 25, 2024 and sell it today you would earn a total of 6.00 from holding Western Asset High or generate 0.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset High vs. Pimco Investment Grade
Performance |
| Timeline |
| Western Asset High |
| Pimco Investment Grade |
Western Asset and Pimco Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Pimco Investment
The main advantage of trading using opposite Western Asset and Pimco Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Pimco Investment 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 Investment will offset losses from the drop in Pimco Investment's long position.| Western Asset vs. Legg Mason Bw | Western Asset vs. Alternative Asset Allocation | Western Asset vs. Enhanced Large Pany | Western Asset vs. Falcon Focus Scv |
| Pimco Investment vs. Pace High Yield | Pimco Investment vs. Western Asset High | Pimco Investment vs. Ab Global Risk | Pimco Investment vs. Pioneer High Income |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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