Correlation Between Vanguard High and Pimco Preferred

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

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

Diversification Opportunities for Vanguard High and Pimco Preferred

0.86

Correlation Coefficient

Vanguard High  Pimco Preferred

Very poor diversification

The 3 months correlation between Vanguard and Pimco is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard High Dividend and Pimco Preferred And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Preferred And and Vanguard High 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 High Dividend are associated (or correlated) with Pimco Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Preferred And has no effect on the direction of Vanguard High i.e., Vanguard High and Pimco Preferred go up and down completely randomly.

Pair Corralation between Vanguard High and Pimco Preferred

Considering the 90-day investment horizon Vanguard High Dividend is expected to generate 3.62 times more return on investment than Pimco Preferred. However, Vanguard High is 3.62 times more volatile than Pimco Preferred And. It trades about -0.04 of its potential returns per unit of risk. Pimco Preferred And is currently generating about -0.28 per unit of risk. If you would invest  11,867  in Vanguard High Dividend on January 26, 2024 and sell it today you would lose (73.00) from holding Vanguard High Dividend or give up 0.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	91.3%
Values	Daily Returns

Vanguard High Dividend  vs.  Pimco Preferred And

Vanguard High Dividend

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard High Dividend are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Vanguard High is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pimco Preferred And

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Preferred And are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pimco Preferred is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard High and Pimco Preferred

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

The idea behind Vanguard High Dividend and Pimco Preferred And 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.