Correlation Between Prudential High and Pimco Incme

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

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

Diversification Opportunities for Prudential High and Pimco Incme

0.04

Correlation Coefficient

Prudential High  Pimco Incme

Significant diversification

The 3 months correlation between Prudential and Pimco is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Prudential High Yield and Pimco Incme Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Incme Fund and Prudential High 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 Prudential High Yield are associated (or correlated) with Pimco Incme. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Incme Fund has no effect on the direction of Prudential High i.e., Prudential High and Pimco Incme go up and down completely randomly.

Pair Corralation between Prudential High and Pimco Incme

Assuming the 90 days horizon Prudential High is expected to generate 2.39 times less return on investment than Pimco Incme. But when comparing it to its historical volatility, Prudential High Yield is 1.73 times less risky than Pimco Incme. It trades about 0.15 of its potential returns per unit of risk. Pimco Incme Fund is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,055  in Pimco Incme Fund on September 5, 2024 and sell it today you would earn a total of  11.00  from holding Pimco Incme Fund or generate 1.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Prudential High Yield  vs.  Pimco Incme Fund

Prudential High Yield

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential High Yield are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Prudential High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pimco Incme Fund

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Incme Fund are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pimco Incme is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Prudential High and Pimco Incme

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

The idea behind Prudential High Yield and Pimco Incme Fund 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.