Correlation Between Pimco Income and Nuveen Preferred

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

By analyzing existing cross correlation between Pimco Income Fund and Nuveen Preferred Securities, you can compare the effects of market volatilities on Pimco Income and Nuveen Preferred 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 Nuveen Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Income and Nuveen Preferred.

Diversification Opportunities for Pimco Income and Nuveen Preferred

0.85

Correlation Coefficient

Pimco Income  Nuveen Preferred

Very poor diversification

The 3 months correlation between Pimco and Nuveen is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Income Fund and Nuveen Preferred Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Preferred Sec 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 Fund are associated (or correlated) with Nuveen Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Preferred Sec has no effect on the direction of Pimco Income i.e., Pimco Income and Nuveen Preferred go up and down completely randomly.

Pair Corralation between Pimco Income and Nuveen Preferred

Assuming the 90 days horizon Pimco Income Fund is expected to under-perform the Nuveen Preferred. In addition to that, Pimco Income is 1.47 times more volatile than Nuveen Preferred Securities. It trades about -0.42 of its total potential returns per unit of risk. Nuveen Preferred Securities is currently generating about -0.39 per unit of volatility. If you would invest  1,569  in Nuveen Preferred Securities on October 8, 2024 and sell it today you would lose (15.00) from holding Nuveen Preferred Securities or give up 0.96% of portfolio value over 90 days.

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

Pimco Income Fund  vs.  Nuveen Preferred Securities

Pimco Income

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nuveen Preferred Sec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuveen Preferred Securities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Nuveen Preferred 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 Nuveen Preferred

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

The idea behind Pimco Income Fund and Nuveen Preferred Securities 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.