Correlation Between Pimco Income and Payden/kravitz Cash

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

Diversification Opportunities for Pimco Income and Payden/kravitz Cash

0.95

Correlation Coefficient

Pimco Income  Payden/kravitz Cash

Almost no diversification

The 3 months correlation between Pimco and Payden/kravitz is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Income Fund and Paydenkravitz Cash Balance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden/kravitz Cash 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 Payden/kravitz Cash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden/kravitz Cash has no effect on the direction of Pimco Income i.e., Pimco Income and Payden/kravitz Cash go up and down completely randomly.

Pair Corralation between Pimco Income and Payden/kravitz Cash

Assuming the 90 days horizon Pimco Income Fund is expected to generate 3.02 times more return on investment than Payden/kravitz Cash. However, Pimco Income is 3.02 times more volatile than Paydenkravitz Cash Balance. It trades about 0.22 of its potential returns per unit of risk. Paydenkravitz Cash Balance is currently generating about 0.29 per unit of risk. If you would invest  1,038  in Pimco Income Fund on December 30, 2024 and sell it today you would earn a total of  32.00  from holding Pimco Income Fund or generate 3.08% return on investment over 90 days.

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

Pimco Income Fund  vs.  Paydenkravitz Cash Balance

Pimco Income

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Income 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 Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Payden/kravitz Cash

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Paydenkravitz Cash Balance are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Payden/kravitz Cash 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 Payden/kravitz Cash

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

The idea behind Pimco Income Fund and Paydenkravitz Cash Balance 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.