Correlation Between Western Asset and Pimco Income
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Pimco Income 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 Income Fund, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Pimco Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Pimco Income.
Diversification Opportunities for Western Asset and Pimco Income
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Western and Pimco is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Pimco Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Income 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 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 Western Asset i.e., Western Asset and Pimco Income go up and down completely randomly.
Pair Corralation between Western Asset and Pimco Income
Assuming the 90 days horizon Western Asset High is expected to generate 0.79 times more return on investment than Pimco Income. However, Western Asset High is 1.26 times less risky than Pimco Income. It trades about 0.13 of its potential returns per unit of risk. Pimco Income Fund is currently generating about 0.04 per unit of risk. If you would invest 702.00 in Western Asset High on September 13, 2024 and sell it today you would earn a total of 6.00 from holding Western Asset High or generate 0.85% 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 Income Fund
Performance |
| Timeline |
| Western Asset High |
| Pimco Income |
Western Asset and Pimco Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Pimco Income
The main advantage of trading using opposite Western Asset and Pimco Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Guggenheim Risk Managed | Western Asset vs. Simt Real Estate | Western Asset vs. Redwood Real Estate | Western Asset vs. Vy Clarion Real |
| Pimco Income vs. Financials Ultrasector Profund | Pimco Income vs. Fidelity Advisor Financial | Pimco Income vs. Prudential Jennison Financial | Pimco Income vs. Angel Oak Financial |
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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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