Correlation Between Pimco Municipal and Pimco New

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

By analyzing existing cross correlation between Pimco Municipal Income and Pimco New York, you can compare the effects of market volatilities on Pimco Municipal and Pimco New 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 Municipal with a short position of Pimco New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Municipal and Pimco New.

Diversification Opportunities for Pimco Municipal and Pimco New

0.77

Correlation Coefficient

Pimco Municipal  Pimco New

Poor diversification

The 3 months correlation between Pimco and Pimco is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Municipal Income and Pimco New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco New York and Pimco Municipal 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 Municipal Income are associated (or correlated) with Pimco New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco New York has no effect on the direction of Pimco Municipal i.e., Pimco Municipal and Pimco New go up and down completely randomly.

Pair Corralation between Pimco Municipal and Pimco New

Considering the 90-day investment horizon Pimco Municipal Income is expected to under-perform the Pimco New. In addition to that, Pimco Municipal is 1.71 times more volatile than Pimco New York. It trades about -0.1 of its total potential returns per unit of risk. Pimco New York is currently generating about -0.11 per unit of volatility. If you would invest  779.00  in Pimco New York on September 14, 2024 and sell it today you would lose (29.00) from holding Pimco New York or give up 3.72% of portfolio value over 90 days.

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

Pimco Municipal Income  vs.  Pimco New York

Pimco Municipal Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco Municipal Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Pimco Municipal is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pimco New York

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco New York has generated negative risk-adjusted returns adding no value to fund investors. Despite fairly strong basic indicators, Pimco New 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 Municipal and Pimco New

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

The idea behind Pimco Municipal Income and Pimco New York 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.