Correlation Between Vanguard Total and Pimco Diversified

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Pimco Diversified 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 Vanguard Total and Pimco Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total Stock and Pimco Diversified Income, you can compare the effects of market volatilities on Vanguard Total and Pimco Diversified 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 Vanguard Total with a short position of Pimco Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Pimco Diversified.

Diversification Opportunities for Vanguard Total and Pimco Diversified

0.68
  Correlation Coefficient

Poor diversification

The 3 months correlation between Vanguard and Pimco is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and PIMCO DIVERSIFIED INCOME in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Diversified Income and Vanguard Total 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 Vanguard Total Stock are associated (or correlated) with Pimco Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Diversified Income has no effect on the direction of Vanguard Total i.e., Vanguard Total and Pimco Diversified go up and down completely randomly.

Pair Corralation between Vanguard Total and Pimco Diversified

Considering the 90-day investment horizon Vanguard Total Stock is expected to generate 2.95 times more return on investment than Pimco Diversified. However, Vanguard Total is 2.95 times more volatile than Pimco Diversified Income. It trades about 0.21 of its potential returns per unit of risk. Pimco Diversified Income is currently generating about 0.15 per unit of risk. If you would invest  24,346  in Vanguard Total Stock on December 29, 2023 and sell it today you would earn a total of  1,627  from holding Vanguard Total Stock or generate 6.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Vanguard Total Stock  vs.  PIMCO DIVERSIFIED INCOME

 Performance 
       Timeline  
Vanguard Total Stock 

Risk-Adjusted Performance

17 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Vanguard Total may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Pimco Diversified Income 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Diversified Income are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Pimco Diversified is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Total and Pimco Diversified Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vanguard Total and Pimco Diversified

The main advantage of trading using opposite Vanguard Total and Pimco Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Pimco Diversified 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 Diversified will offset losses from the drop in Pimco Diversified's long position.
The idea behind Vanguard Total Stock and Pimco Diversified 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.
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 CEOs Directory module to screen CEOs from public companies around the world.

Other Complementary Tools

Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Stock Screener
Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook.
Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Equity Valuation
Check real value of public entities based on technical and fundamental data
Odds Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
Price Transformation
Use Price Transformation models to analyze the depth of different equity instruments across global markets
ETF Categories
List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments
Latest Portfolios
Quick portfolio dashboard that showcases your latest portfolios