Correlation Between Income Growth and Pimco New

Can any of the company-specific risk be diversified away by investing in both Income Growth and Pimco New 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 Income Growth and Pimco New into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Income Growth Fund and Pimco New York, you can compare the effects of market volatilities on Income Growth and Pimco New 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 Income Growth with a short position of Pimco New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Income Growth and Pimco New.

Diversification Opportunities for Income Growth and Pimco New

0.22

Correlation Coefficient

Income Growth  Pimco New

Modest diversification

The 3 months correlation between Income and Pimco is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Income Growth Fund and Pimco New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco New York and Income Growth 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 Income Growth Fund are associated (or correlated) with Pimco New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco New York has no effect on the direction of Income Growth i.e., Income Growth and Pimco New go up and down completely randomly.

Pair Corralation between Income Growth and Pimco New

Assuming the 90 days horizon Income Growth Fund is expected to under-perform the Pimco New. In addition to that, Income Growth is 1.37 times more volatile than Pimco New York. It trades about -0.02 of its total potential returns per unit of risk. Pimco New York is currently generating about 0.02 per unit of volatility. If you would invest  558.00  in Pimco New York on December 28, 2024 and sell it today you would earn a total of  3.00  from holding Pimco New York or generate 0.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Income Growth Fund  vs.  Pimco New York

Income Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Income Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Income Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pimco New York

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco New York are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, Pimco New is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Income Growth and Pimco New

The main advantage of trading using opposite Income Growth and Pimco New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Income Growth position performs unexpectedly, Pimco New 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 New will offset losses from the drop in Pimco New's long position.

The idea behind Income Growth Fund and Pimco New York 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..