Correlation Between Pimco Low and High Yield
Can any of the company-specific risk be diversified away by investing in both Pimco Low and High Yield 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 Low and High Yield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Low Duration and High Yield Fund, you can compare the effects of market volatilities on Pimco Low and High Yield 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 Low with a short position of High Yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Low and High Yield.
Diversification Opportunities for Pimco Low and High Yield
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pimco and High is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Low Duration and High Yield Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Yield Fund and Pimco Low 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 Low Duration are associated (or correlated) with High Yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Yield Fund has no effect on the direction of Pimco Low i.e., Pimco Low and High Yield go up and down completely randomly.
Pair Corralation between Pimco Low and High Yield
Assuming the 90 days horizon Pimco Low is expected to generate 1.15 times less return on investment than High Yield. But when comparing it to its historical volatility, Pimco Low Duration is 1.09 times less risky than High Yield. It trades about 0.09 of its potential returns per unit of risk. High Yield Fund is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 802.00 in High Yield Fund on September 6, 2024 and sell it today you would earn a total of 8.00 from holding High Yield Fund or generate 1.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Pimco Low Duration vs. High Yield Fund
Performance |
Timeline |
Pimco Low Duration |
High Yield Fund |
Pimco Low and High Yield Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pimco Low and High Yield
The main advantage of trading using opposite Pimco Low and High Yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Low position performs unexpectedly, High Yield 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 High Yield will offset losses from the drop in High Yield's long position.Pimco Low vs. Vanguard Reit Index | Pimco Low vs. Columbia Real Estate | Pimco Low vs. Forum Real Estate | Pimco Low vs. Guggenheim Risk Managed |
High Yield vs. Guggenheim High Yield | High Yield vs. Multimanager Lifestyle Aggressive | High Yield vs. Artisan High Income | High Yield vs. Vanguard Star Fund |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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