Correlation Between Westwood Largecap and Pimco Municipal
Can any of the company-specific risk be diversified away by investing in both Westwood Largecap 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 Westwood Largecap and Pimco Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westwood Largecap Value and Pimco Municipal Income, you can compare the effects of market volatilities on Westwood Largecap 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 Westwood Largecap with a short position of Pimco Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westwood Largecap and Pimco Municipal.
Diversification Opportunities for Westwood Largecap and Pimco Municipal
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Westwood and Pimco is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Westwood Largecap Value 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 Westwood Largecap 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 Westwood Largecap Value 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 Westwood Largecap i.e., Westwood Largecap and Pimco Municipal go up and down completely randomly.
Pair Corralation between Westwood Largecap and Pimco Municipal
Assuming the 90 days horizon Westwood Largecap Value is expected to generate 0.95 times more return on investment than Pimco Municipal. However, Westwood Largecap Value is 1.05 times less risky than Pimco Municipal. It trades about 0.25 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 1,476 in Westwood Largecap Value on August 31, 2024 and sell it today you would earn a total of 72.00 from holding Westwood Largecap Value or generate 4.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westwood Largecap Value vs. Pimco Municipal Income
Performance |
| Timeline |
| Westwood Largecap Value |
| Pimco Municipal Income |
Westwood Largecap and Pimco Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westwood Largecap and Pimco Municipal
The main advantage of trading using opposite Westwood Largecap and Pimco Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westwood Largecap 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.| Westwood Largecap vs. Ab Global Risk | Westwood Largecap vs. Scharf Global Opportunity | Westwood Largecap vs. Pimco Global Multi Asset | Westwood Largecap vs. Wasatch Global Opportunities |
| Pimco Municipal vs. Pimco Municipal Income | Pimco Municipal vs. Pimco Municipal Income | Pimco Municipal vs. Pimco California Municipal | Pimco Municipal vs. Pimco New York |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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