Correlation Between Pimco Income and Nuveen High

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

Diversification Opportunities for Pimco Income and Nuveen High

0.74

Correlation Coefficient

Pimco Income  Nuveen High

Poor diversification

The 3 months correlation between Pimco and Nuveen is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Income Fund and Nuveen High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen High Yield 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 High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen High Yield has no effect on the direction of Pimco Income i.e., Pimco Income and Nuveen High go up and down completely randomly.

Pair Corralation between Pimco Income and Nuveen High

Assuming the 90 days horizon Pimco Income Fund is expected to under-perform the Nuveen High. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pimco Income Fund is 2.11 times less risky than Nuveen High. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Nuveen High Yield is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,477  in Nuveen High Yield on October 6, 2024 and sell it today you would earn a total of  2.00  from holding Nuveen High Yield or generate 0.14% return on investment over 90 days.

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

Pimco Income Fund  vs.  Nuveen High Yield

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.

Nuveen High Yield

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Pimco Income Fund and Nuveen High Yield 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.

Check out your portfolio center.

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 Equity Valuation module to check real value of public entities based on technical and fundamental data.