Correlation Between GM and PIMCO ETF
Can any of the company-specific risk be diversified away by investing in both GM and PIMCO ETF 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 GM and PIMCO ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and PIMCO ETF Trust, you can compare the effects of market volatilities on GM and PIMCO ETF 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 GM with a short position of PIMCO ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and PIMCO ETF.
Diversification Opportunities for GM and PIMCO ETF
Modest diversification
The 3 months correlation between GM and PIMCO is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and PIMCO ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO ETF Trust and GM 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 General Motors are associated (or correlated) with PIMCO ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO ETF Trust has no effect on the direction of GM i.e., GM and PIMCO ETF go up and down completely randomly.
Pair Corralation between GM and PIMCO ETF
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the PIMCO ETF. But the stock apears to be less risky and, when comparing its historical volatility, General Motors is 2.1 times less risky than PIMCO ETF. The stock trades about -0.16 of its potential returns per unit of risk. The PIMCO ETF Trust is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,548 in PIMCO ETF Trust on September 14, 2024 and sell it today you would earn a total of 93.00 from holding PIMCO ETF Trust or generate 3.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
General Motors vs. PIMCO ETF Trust
Performance |
| Timeline |
| General Motors |
| PIMCO ETF Trust |
GM and PIMCO ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and PIMCO ETF
The main advantage of trading using opposite GM and PIMCO ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, PIMCO ETF 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 ETF will offset losses from the drop in PIMCO ETF's long position.The idea behind General Motors and PIMCO ETF Trust 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.| PIMCO ETF vs. Tidal Trust II | PIMCO ETF vs. ProShares VIX Mid Term | PIMCO ETF vs. ProShares VIX Short Term | PIMCO ETF vs. LHA Market State |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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