Correlation Between Pimco Dynamic and Pimco Income

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

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

Diversification Opportunities for Pimco Dynamic and Pimco Income

0.95

Correlation Coefficient

Pimco Dynamic  Pimco Income

Almost no diversification

The 3 months correlation between Pimco and Pimco is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Dynamic Income and Pimco Income Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Income Strategy and Pimco Dynamic 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 Pimco Dynamic Income 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 Strategy has no effect on the direction of Pimco Dynamic i.e., Pimco Dynamic and Pimco Income go up and down completely randomly.

Pair Corralation between Pimco Dynamic and Pimco Income

Considering the 90-day investment horizon Pimco Dynamic Income is expected to generate 1.45 times more return on investment than Pimco Income. However, Pimco Dynamic is 1.45 times more volatile than Pimco Income Strategy. It trades about 0.42 of its potential returns per unit of risk. Pimco Income Strategy is currently generating about 0.24 per unit of risk. If you would invest  1,782  in Pimco Dynamic Income on December 27, 2024 and sell it today you would earn a total of  193.00  from holding Pimco Dynamic Income or generate 10.83% return on investment over 90 days.

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

Pimco Dynamic Income  vs.  Pimco Income Strategy

Pimco Dynamic Income

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Dynamic Income are ranked lower than 33 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly unfluctuating fundamental indicators, Pimco Dynamic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pimco Income Strategy

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Income Strategy are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy technical and fundamental indicators, Pimco Income is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Pimco Dynamic and Pimco Income

The main advantage of trading using opposite Pimco Dynamic and Pimco Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Dynamic 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.

The idea behind Pimco Dynamic Income and Pimco Income Strategy 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.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.