Correlation Between GM and PIMCO Monthly
Can any of the company-specific risk be diversified away by investing in both GM and PIMCO Monthly 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 Monthly 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 Monthly Income, you can compare the effects of market volatilities on GM and PIMCO Monthly 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 Monthly. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and PIMCO Monthly.
Diversification Opportunities for GM and PIMCO Monthly
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and PIMCO is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and PIMCO Monthly Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Monthly Income 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 Monthly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Monthly Income has no effect on the direction of GM i.e., GM and PIMCO Monthly go up and down completely randomly.
Pair Corralation between GM and PIMCO Monthly
Allowing for the 90-day total investment horizon General Motors is expected to generate 11.18 times more return on investment than PIMCO Monthly. However, GM is 11.18 times more volatile than PIMCO Monthly Income. It trades about 0.07 of its potential returns per unit of risk. PIMCO Monthly Income is currently generating about 0.16 per unit of risk. If you would invest 5,273 in General Motors on August 29, 2024 and sell it today you would earn a total of 206.00 from holding General Motors or generate 3.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. PIMCO Monthly Income
Performance |
| Timeline |
| General Motors |
| PIMCO Monthly Income |
GM and PIMCO Monthly Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and PIMCO Monthly
The main advantage of trading using opposite GM and PIMCO Monthly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, PIMCO Monthly 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 Monthly will offset losses from the drop in PIMCO Monthly's long position.The idea behind General Motors and PIMCO Monthly Income 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 Monthly vs. Mackenzie Unconstrained Bond | PIMCO Monthly vs. Global X Active | PIMCO Monthly vs. Mackenzie Floating Rate | PIMCO Monthly vs. PIMCO Investment Grade |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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