Correlation Between Pimco Income and 1290 High

Can any of the company-specific risk be diversified away by investing in both Pimco Income and 1290 High 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 1290 High 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 1290 High Yield, you can compare the effects of market volatilities on Pimco Income and 1290 High 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 1290 High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Income and 1290 High.

Diversification Opportunities for Pimco Income and 1290 High

0.86

Correlation Coefficient

Pimco Income  1290 High

Very poor diversification

The 3 months correlation between Pimco and 1290 is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Income Strategy and 1290 High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1290 High Yield 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 1290 High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1290 High Yield has no effect on the direction of Pimco Income i.e., Pimco Income and 1290 High go up and down completely randomly.

Pair Corralation between Pimco Income and 1290 High

Considering the 90-day investment horizon Pimco Income Strategy is expected to generate 1.73 times more return on investment than 1290 High. However, Pimco Income is 1.73 times more volatile than 1290 High Yield. It trades about 0.28 of its potential returns per unit of risk. 1290 High Yield is currently generating about 0.12 per unit of risk. If you would invest  715.00  in Pimco Income Strategy on December 20, 2024 and sell it today you would earn a total of  34.00  from holding Pimco Income Strategy or generate 4.76% 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.  1290 High Yield

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 21 (%) 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.

1290 High Yield

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 1290 High Yield are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, 1290 High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pimco Income and 1290 High

The main advantage of trading using opposite Pimco Income and 1290 High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Income position performs unexpectedly, 1290 High 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 1290 High will offset losses from the drop in 1290 High's long position.

The idea behind Pimco Income Strategy and 1290 High Yield 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.