Correlation Between Pimco Dynamic and Vanguard Total

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

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

Diversification Opportunities for Pimco Dynamic and Vanguard Total

0.93

Correlation Coefficient

Pimco Dynamic  Vanguard Total

Almost no diversification

The 3 months correlation between Pimco and Vanguard is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Dynamic Income and Vanguard Total Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Stock and Pimco Dynamic 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 Dynamic Income are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Stock has no effect on the direction of Pimco Dynamic i.e., Pimco Dynamic and Vanguard Total go up and down completely randomly.

Pair Corralation between Pimco Dynamic and Vanguard Total

Considering the 90-day investment horizon Pimco Dynamic is expected to generate 1.84 times less return on investment than Vanguard Total. But when comparing it to its historical volatility, Pimco Dynamic Income is 1.87 times less risky than Vanguard Total. It trades about 0.24 of its potential returns per unit of risk. Vanguard Total Stock is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  27,414  in Vanguard Total Stock on May 6, 2025 and sell it today you would earn a total of  3,160  from holding Vanguard Total Stock or generate 11.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.41%
Values	Daily Returns

Pimco Dynamic Income  vs.  Vanguard Total Stock

Pimco Dynamic Income

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Dynamic Income are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong fundamental indicators, Pimco Dynamic is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Vanguard Total Stock

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Vanguard Total may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Pimco Dynamic and Vanguard Total

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

The idea behind Pimco Dynamic Income and Vanguard Total Stock 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.