Correlation Between Pimco Dynamic and Invesco KBW

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

Diversification Opportunities for Pimco Dynamic and Invesco KBW

0.71

Correlation Coefficient

Pimco Dynamic  Invesco KBW

Poor diversification

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 Dynamic Income and Invesco KBW Regional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco KBW Regional 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 Invesco KBW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco KBW Regional has no effect on the direction of Pimco Dynamic i.e., Pimco Dynamic and Invesco KBW go up and down completely randomly.

Pair Corralation between Pimco Dynamic and Invesco KBW

Considering the 90-day investment horizon Pimco Dynamic Income is expected to generate 0.26 times more return on investment than Invesco KBW. However, Pimco Dynamic Income is 3.83 times less risky than Invesco KBW. It trades about 0.15 of its potential returns per unit of risk. Invesco KBW Regional is currently generating about 0.03 per unit of risk. If you would invest  1,310  in Pimco Dynamic Income on May 5, 2025 and sell it today you would earn a total of  46.00  from holding Pimco Dynamic Income or generate 3.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Pimco Dynamic Income  vs.  Invesco KBW Regional

Pimco Dynamic Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Dynamic Income are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Pimco Dynamic is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Invesco KBW Regional

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco KBW Regional are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Invesco KBW is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Pimco Dynamic and Invesco KBW

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

The idea behind Pimco Dynamic Income and Invesco KBW Regional 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.