Correlation Between GM and PIMCO Short

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both GM and PIMCO Short 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 Short 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 Short Term High, you can compare the effects of market volatilities on GM and PIMCO Short 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 Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and PIMCO Short.

Diversification Opportunities for GM and PIMCO Short

0.32
  Correlation Coefficient

Weak diversification

The 3 months correlation between GM and PIMCO is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and PIMCO Short Term High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Short Term 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 Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Short Term has no effect on the direction of GM i.e., GM and PIMCO Short go up and down completely randomly.

Pair Corralation between GM and PIMCO Short

Allowing for the 90-day total investment horizon General Motors is expected to generate 10.28 times more return on investment than PIMCO Short. However, GM is 10.28 times more volatile than PIMCO Short Term High. It trades about 0.08 of its potential returns per unit of risk. PIMCO Short Term High is currently generating about 0.14 per unit of risk. If you would invest  4,551  in General Motors on September 1, 2024 and sell it today you would earn a total of  1,008  from holding General Motors or generate 22.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy96.92%
ValuesDaily Returns

General Motors  vs.  PIMCO Short Term High

 Performance 
       Timeline  
General Motors 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, GM displayed solid returns over the last few months and may actually be approaching a breakup point.
PIMCO Short Term 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Short Term High are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, PIMCO Short is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

GM and PIMCO Short Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GM and PIMCO Short

The main advantage of trading using opposite GM and PIMCO Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, PIMCO Short 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 Short will offset losses from the drop in PIMCO Short's long position.
The idea behind General Motors and PIMCO Short Term High 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.
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

Other Complementary Tools

Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Share Portfolio
Track or share privately all of your investments from the convenience of any device
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Investing Opportunities
Build portfolios using our predefined set of ideas and optimize them against your investing preferences
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios