Correlation Between GM and Pimco Extended
Can any of the company-specific risk be diversified away by investing in both GM and Pimco Extended 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 Extended 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 Extended Duration, you can compare the effects of market volatilities on GM and Pimco Extended 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 Extended. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Pimco Extended.
Diversification Opportunities for GM and Pimco Extended
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GM and Pimco is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Pimco Extended Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Extended Duration 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 Extended. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Extended Duration has no effect on the direction of GM i.e., GM and Pimco Extended go up and down completely randomly.
Pair Corralation between GM and Pimco Extended
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Pimco Extended. In addition to that, GM is 1.93 times more volatile than Pimco Extended Duration. It trades about -0.34 of its total potential returns per unit of risk. Pimco Extended Duration is currently generating about 0.14 per unit of volatility. If you would invest 1,281 in Pimco Extended Duration on November 27, 2024 and sell it today you would earn a total of 41.00 from holding Pimco Extended Duration or generate 3.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Pimco Extended Duration
Performance |
| Timeline |
| General Motors |
| Pimco Extended Duration |
GM and Pimco Extended Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Pimco Extended
The main advantage of trading using opposite GM and Pimco Extended positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Pimco Extended 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 Extended will offset losses from the drop in Pimco Extended's long position.The idea behind General Motors and Pimco Extended Duration 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 Extended vs. Vanguard Extended Duration | Pimco Extended vs. Pimco Long Term Credit | Pimco Extended vs. Pimco Extended Duration | Pimco Extended vs. Pimco Long Term Credit |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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