Correlation Between Pimco Diversified and Income Fund

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

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

Diversification Opportunities for Pimco Diversified and Income Fund

0.18

Correlation Coefficient

Pimco Diversified  Income Fund

Average diversification

The 3 months correlation between Pimco and Income is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Diversified Income and Income Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Fund and Pimco Diversified 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 Diversified Income are associated (or correlated) with Income Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Fund has no effect on the direction of Pimco Diversified i.e., Pimco Diversified and Income Fund go up and down completely randomly.

Pair Corralation between Pimco Diversified and Income Fund

Assuming the 90 days horizon Pimco Diversified Income is expected to generate 0.56 times more return on investment than Income Fund. However, Pimco Diversified Income is 1.77 times less risky than Income Fund. It trades about 0.1 of its potential returns per unit of risk. Income Fund Of is currently generating about 0.05 per unit of risk. If you would invest  832.00  in Pimco Diversified Income on September 20, 2024 and sell it today you would earn a total of  138.00  from holding Pimco Diversified Income or generate 16.59% return on investment over 90 days.

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

Pimco Diversified Income  vs.  Income Fund Of

Pimco Diversified Income

Risk-Adjusted Performance

0 of 100

Very Weak

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

Income Fund

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Pimco Diversified and Income Fund

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

The idea behind Pimco Diversified Income and Income Fund Of 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.