Correlation Between Pimco New and Invesco High

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

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

Diversification Opportunities for Pimco New and Invesco High

-0.71

Correlation Coefficient

Pimco New  Invesco High

Pay attention - limited upside

The 3 months correlation between Pimco and Invesco is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Pimco New York and Invesco High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco High Income and Pimco New 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 New York are associated (or correlated) with Invesco High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco High Income has no effect on the direction of Pimco New i.e., Pimco New and Invesco High go up and down completely randomly.

Pair Corralation between Pimco New and Invesco High

Considering the 90-day investment horizon Pimco New York is expected to under-perform the Invesco High. In addition to that, Pimco New is 1.53 times more volatile than Invesco High Income. It trades about -0.12 of its total potential returns per unit of risk. Invesco High Income is currently generating about 0.15 per unit of volatility. If you would invest  733.00  in Invesco High Income on September 13, 2024 and sell it today you would earn a total of  21.00  from holding Invesco High Income or generate 2.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	88.89%
Values	Daily Returns

Pimco New York  vs.  Invesco High Income

Pimco New York

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco New York has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable basic indicators, Pimco New is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Invesco High Income

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Invesco High Income has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Invesco 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 New and Invesco High

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

The idea behind Pimco New York and Invesco High 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.