Correlation Between Global X and PIMCO RAFI
Can any of the company-specific risk be diversified away by investing in both Global X and PIMCO RAFI 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 Global X and PIMCO RAFI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Funds and PIMCO RAFI Dynamic, you can compare the effects of market volatilities on Global X and PIMCO RAFI 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 Global X with a short position of PIMCO RAFI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and PIMCO RAFI.
Diversification Opportunities for Global X and PIMCO RAFI
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Global and PIMCO is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds and PIMCO RAFI Dynamic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO RAFI Dynamic and Global X 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 Global X Funds are associated (or correlated) with PIMCO RAFI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO RAFI Dynamic has no effect on the direction of Global X i.e., Global X and PIMCO RAFI go up and down completely randomly.
Pair Corralation between Global X and PIMCO RAFI
Considering the 90-day investment horizon Global X is expected to generate 116.22 times less return on investment than PIMCO RAFI. In addition to that, Global X is 1.33 times more volatile than PIMCO RAFI Dynamic. It trades about 0.0 of its total potential returns per unit of risk. PIMCO RAFI Dynamic is currently generating about 0.14 per unit of volatility. If you would invest 4,529 in PIMCO RAFI Dynamic on September 3, 2024 and sell it today you would earn a total of 726.00 from holding PIMCO RAFI Dynamic or generate 16.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Funds vs. PIMCO RAFI Dynamic
Performance |
| Timeline |
| Global X Funds |
| PIMCO RAFI Dynamic |
Global X and PIMCO RAFI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and PIMCO RAFI
The main advantage of trading using opposite Global X and PIMCO RAFI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, PIMCO RAFI 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 RAFI will offset losses from the drop in PIMCO RAFI's long position.| Global X vs. SCOR PK | Global X vs. HUMANA INC | Global X vs. Aquagold International | Global X vs. Barloworld Ltd ADR |
| PIMCO RAFI vs. Global X Funds | PIMCO RAFI vs. Dell Technologies | PIMCO RAFI vs. Juniper Networks | PIMCO RAFI vs. HUMANA INC |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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