Correlation Between Pimco Income and Thornburg Strategic

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

Diversification Opportunities for Pimco Income and Thornburg Strategic

0.9

Correlation Coefficient

Pimco Income  Thornburg Strategic

Almost no diversification

The 3 months correlation between Pimco and Thornburg is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Income Fund and Thornburg Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg Strategic 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 Thornburg Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg Strategic has no effect on the direction of Pimco Income i.e., Pimco Income and Thornburg Strategic go up and down completely randomly.

Pair Corralation between Pimco Income and Thornburg Strategic

Assuming the 90 days horizon Pimco Income Fund is expected to generate 1.07 times more return on investment than Thornburg Strategic. However, Pimco Income is 1.07 times more volatile than Thornburg Strategic Income. It trades about 0.14 of its potential returns per unit of risk. Thornburg Strategic Income is currently generating about 0.1 per unit of risk. If you would invest  1,061  in Pimco Income Fund on September 12, 2024 and sell it today you would earn a total of  6.00  from holding Pimco Income Fund or generate 0.57% 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.  Thornburg Strategic Income

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.

Thornburg Strategic

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Pimco Income Fund and Thornburg Strategic 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.