Correlation Between Pimco Income and Janus Forty

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

Diversification Opportunities for Pimco Income and Janus Forty

-0.01

Correlation Coefficient

Pimco Income  Janus Forty

Good diversification

The 3 months correlation between Pimco and Janus is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Income Fund and Janus Forty Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Forty Fund 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 Janus Forty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Forty Fund has no effect on the direction of Pimco Income i.e., Pimco Income and Janus Forty go up and down completely randomly.

Pair Corralation between Pimco Income and Janus Forty

Assuming the 90 days horizon Pimco Income Fund is expected to generate 0.13 times more return on investment than Janus Forty. However, Pimco Income Fund is 7.51 times less risky than Janus Forty. It trades about 0.08 of its potential returns per unit of risk. Janus Forty Fund is currently generating about -0.02 per unit of risk. If you would invest  1,029  in Pimco Income Fund on September 25, 2024 and sell it today you would earn a total of  22.00  from holding Pimco Income Fund or generate 2.14% return on investment over 90 days.

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

Pimco Income Fund  vs.  Janus Forty Fund

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 fundamental indicators, Pimco Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Janus Forty Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Janus Forty Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Pimco Income and Janus Forty

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

The idea behind Pimco Income Fund and Janus Forty 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.