Correlation Between Pimco Income and Pimco Corporate

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

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

Diversification Opportunities for Pimco Income and Pimco Corporate

0.34

Correlation Coefficient

Pimco Income  Pimco Corporate

Weak diversification

The 3 months correlation between Pimco and Pimco is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Income Strategy and Pimco Corporate Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Corporate Income and Pimco Income 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 Income Strategy are associated (or correlated) with Pimco Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Corporate Income has no effect on the direction of Pimco Income i.e., Pimco Income and Pimco Corporate go up and down completely randomly.

Pair Corralation between Pimco Income and Pimco Corporate

Considering the 90-day investment horizon Pimco Income Strategy is expected to generate 0.7 times more return on investment than Pimco Corporate. However, Pimco Income Strategy is 1.43 times less risky than Pimco Corporate. It trades about 0.16 of its potential returns per unit of risk. Pimco Corporate Income is currently generating about 0.0 per unit of risk. If you would invest  826.00  in Pimco Income Strategy on November 28, 2024 and sell it today you would earn a total of  26.50  from holding Pimco Income Strategy or generate 3.21% return on investment over 90 days.

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

Pimco Income Strategy  vs.  Pimco Corporate Income

Pimco Income Strategy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Income Strategy are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Pimco Income is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pimco Corporate Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pimco Corporate Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy fundamental indicators, Pimco Corporate 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 Income and Pimco Corporate

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

The idea behind Pimco Income Strategy and Pimco Corporate Income 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.