Correlation Between Prudential Short-term and Pimco Incme

Can any of the company-specific risk be diversified away by investing in both Prudential Short-term 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 Short-term 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 Short Term Porate and Pimco Incme Fund, you can compare the effects of market volatilities on Prudential Short-term 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 Short-term with a short position of Pimco Incme. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Short-term and Pimco Incme.

Diversification Opportunities for Prudential Short-term and Pimco Incme

0.92

Correlation Coefficient

Prudential Short-term  Pimco Incme

Almost no diversification

The 3 months correlation between Prudential and Pimco is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Short Term Porate 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 Short-term 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 Short Term Porate 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 Short-term i.e., Prudential Short-term and Pimco Incme go up and down completely randomly.

Pair Corralation between Prudential Short-term and Pimco Incme

Assuming the 90 days horizon Prudential Short-term is expected to generate 1.75 times less return on investment than Pimco Incme. But when comparing it to its historical volatility, Prudential Short Term Porate is 1.59 times less risky than Pimco Incme. It trades about 0.2 of its potential returns per unit of risk. Pimco Incme Fund is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,037  in Pimco Incme Fund on December 30, 2024 and sell it today you would earn a total of  33.00  from holding Pimco Incme Fund or generate 3.18% return on investment over 90 days.

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

Prudential Short Term Porate  vs.  Pimco Incme Fund

Prudential Short Term

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prudential Short Term Porate are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Prudential Short-term 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

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Incme Fund are ranked lower than 17 (%) 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 Short-term and Pimco Incme

The main advantage of trading using opposite Prudential Short-term and Pimco Incme positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Short-term 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 Short Term Porate 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.