Correlation Between Thornburg Income and Pimco Dynamic

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

By analyzing existing cross correlation between Thornburg Income Builder and Pimco Dynamic Income, you can compare the effects of market volatilities on Thornburg Income and Pimco Dynamic 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 Thornburg Income with a short position of Pimco Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thornburg Income and Pimco Dynamic.

Diversification Opportunities for Thornburg Income and Pimco Dynamic

0.88

Correlation Coefficient

Thornburg Income  Pimco Dynamic

Very poor diversification

The 3 months correlation between Thornburg and Pimco is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Thornburg Income Builder and Pimco Dynamic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Dynamic Income and Thornburg 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 Thornburg Income Builder are associated (or correlated) with Pimco Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Dynamic Income has no effect on the direction of Thornburg Income i.e., Thornburg Income and Pimco Dynamic go up and down completely randomly.

Pair Corralation between Thornburg Income and Pimco Dynamic

Given the investment horizon of 90 days Thornburg Income is expected to generate 1.03 times less return on investment than Pimco Dynamic. In addition to that, Thornburg Income is 1.75 times more volatile than Pimco Dynamic Income. It trades about 0.24 of its total potential returns per unit of risk. Pimco Dynamic Income is currently generating about 0.43 per unit of volatility. If you would invest  1,359  in Pimco Dynamic Income on November 28, 2024 and sell it today you would earn a total of  40.00  from holding Pimco Dynamic Income or generate 2.94% return on investment over 90 days.

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

Thornburg Income Builder  vs.  Pimco Dynamic Income

Thornburg Income Builder

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thornburg Income Builder are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Thornburg Income is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pimco Dynamic Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Dynamic Income are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Pimco Dynamic is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Thornburg Income and Pimco Dynamic

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

The idea behind Thornburg Income Builder and Pimco Dynamic Income 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.