Correlation Between Pimco Income and Pimco Low

Can any of the company-specific risk be diversified away by investing in both Pimco Income and Pimco Low 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 Pimco Low 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 Pimco Low Duration, you can compare the effects of market volatilities on Pimco Income and Pimco Low 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 Pimco Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Income and Pimco Low.

Diversification Opportunities for Pimco Income and Pimco Low

0.67

Correlation Coefficient

Pimco Income  Pimco Low

Poor diversification

The 3 months correlation between Pimco and Pimco is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Income Fund and Pimco Low Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Low Duration 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 Pimco Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Low Duration has no effect on the direction of Pimco Income i.e., Pimco Income and Pimco Low go up and down completely randomly.

Pair Corralation between Pimco Income and Pimco Low

Assuming the 90 days horizon Pimco Income Fund is expected to under-perform the Pimco Low. In addition to that, Pimco Income is 1.5 times more volatile than Pimco Low Duration. It trades about -0.32 of its total potential returns per unit of risk. Pimco Low Duration is currently generating about -0.26 per unit of volatility. If you would invest  811.00  in Pimco Low Duration on September 24, 2024 and sell it today you would lose (5.00) from holding Pimco Low Duration or give up 0.62% of portfolio value over 90 days.

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

Pimco Income Fund  vs.  Pimco Low Duration

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.

Pimco Low Duration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco Low Duration has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Pimco Low 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 Pimco Low

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

The idea behind Pimco Income Fund and Pimco Low Duration 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.