Correlation Between California High-yield and Pimco Trends
Can any of the company-specific risk be diversified away by investing in both California High-yield and Pimco Trends 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 California High-yield and Pimco Trends into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California High Yield Municipal and Pimco Trends Managed, you can compare the effects of market volatilities on California High-yield and Pimco Trends 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 California High-yield with a short position of Pimco Trends. Check out your portfolio center. Please also check ongoing floating volatility patterns of California High-yield and Pimco Trends.
Diversification Opportunities for California High-yield and Pimco Trends
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between California and Pimco is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding California High Yield Municipa and Pimco Trends Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Trends Managed and California High-yield 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 California High Yield Municipal are associated (or correlated) with Pimco Trends. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Trends Managed has no effect on the direction of California High-yield i.e., California High-yield and Pimco Trends go up and down completely randomly.
Pair Corralation between California High-yield and Pimco Trends
Assuming the 90 days horizon California High Yield Municipal is expected to under-perform the Pimco Trends. But the mutual fund apears to be less risky and, when comparing its historical volatility, California High Yield Municipal is 1.8 times less risky than Pimco Trends. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Pimco Trends Managed is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 984.00 in Pimco Trends Managed on October 6, 2024 and sell it today you would earn a total of 55.00 from holding Pimco Trends Managed or generate 5.59% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
California High Yield Municipa vs. Pimco Trends Managed
Performance |
Timeline |
California High Yield |
Pimco Trends Managed |
California High-yield and Pimco Trends Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with California High-yield and Pimco Trends
The main advantage of trading using opposite California High-yield and Pimco Trends positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California High-yield position performs unexpectedly, Pimco Trends 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 Trends will offset losses from the drop in Pimco Trends' long position.California High-yield vs. Mid Cap Value | California High-yield vs. Equity Growth Fund | California High-yield vs. Income Growth Fund | California High-yield vs. Diversified Bond Fund |
Pimco Trends vs. Pimco Rae Worldwide | Pimco Trends vs. Pimco Realestaterealreturn Strategy | Pimco Trends vs. Pimco Rae Worldwide | Pimco Trends vs. Pimco Rae Worldwide |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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