Correlation Between Global X and PIMCO Investment
Can any of the company-specific risk be diversified away by investing in both Global X and PIMCO Investment 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 Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Active and PIMCO Investment Grade, you can compare the effects of market volatilities on Global X and PIMCO Investment 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 Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and PIMCO Investment.
Diversification Opportunities for Global X and PIMCO Investment
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Global and PIMCO is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Global X Active and PIMCO Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Investment Grade 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 Active are associated (or correlated) with PIMCO Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Investment Grade has no effect on the direction of Global X i.e., Global X and PIMCO Investment go up and down completely randomly.
Pair Corralation between Global X and PIMCO Investment
Assuming the 90 days trading horizon Global X Active is expected to generate 0.58 times more return on investment than PIMCO Investment. However, Global X Active is 1.72 times less risky than PIMCO Investment. It trades about 0.25 of its potential returns per unit of risk. PIMCO Investment Grade is currently generating about 0.06 per unit of risk. If you would invest 888.00 in Global X Active on September 1, 2024 and sell it today you would earn a total of 18.00 from holding Global X Active or generate 2.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Global X Active vs. PIMCO Investment Grade
Performance |
| Timeline |
| Global X Active |
| PIMCO Investment Grade |
Global X and PIMCO Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and PIMCO Investment
The main advantage of trading using opposite Global X and PIMCO Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, PIMCO Investment 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 Investment will offset losses from the drop in PIMCO Investment's long position.| Global X vs. BMO Covered Call | Global X vs. Forstrong Global Income | Global X vs. BMO Aggregate Bond | Global X vs. iShares Canadian HYBrid |
| PIMCO Investment vs. BMO Mid Corporate | PIMCO Investment vs. CI Canadian Banks | PIMCO Investment vs. BMO Long Corporate | PIMCO Investment vs. Hamilton MidSmall Cap Financials |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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