Correlation Between Pimco Income and Pimco Dynamic

Can any of the company-specific risk be diversified away by investing in both Pimco Income and Pimco Dynamic 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 Dynamic 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 Dynamic Income, you can compare the effects of market volatilities on Pimco Income and Pimco Dynamic 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 Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Income and Pimco Dynamic.

Diversification Opportunities for Pimco Income and Pimco Dynamic

0.88

Correlation Coefficient

Pimco Income  Pimco Dynamic

Very poor diversification

The 3 months correlation between Pimco and Pimco is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Income Strategy and Pimco Dynamic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Dynamic 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 Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Dynamic Income has no effect on the direction of Pimco Income i.e., Pimco Income and Pimco Dynamic go up and down completely randomly.

Pair Corralation between Pimco Income and Pimco Dynamic

Considering the 90-day investment horizon Pimco Income is expected to generate 1.37 times less return on investment than Pimco Dynamic. In addition to that, Pimco Income is 1.07 times more volatile than Pimco Dynamic Income. It trades about 0.37 of its total potential returns per unit of risk. Pimco Dynamic Income is currently generating about 0.53 per unit of volatility. If you would invest  1,890  in Pimco Dynamic Income on November 19, 2024 and sell it today you would earn a total of  60.00  from holding Pimco Dynamic Income or generate 3.17% return on investment over 90 days.

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

Pimco Income Strategy  vs.  Pimco Dynamic Income

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 16 (%) 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.

Pimco Dynamic Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Dynamic Income are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong fundamental indicators, Pimco Dynamic is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Pimco Income and Pimco Dynamic

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

The idea behind Pimco Income Strategy and Pimco Dynamic 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.

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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.