Correlation Between Pimco Floating and Global Bond

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Can any of the company-specific risk be diversified away by investing in both Pimco Floating and Global Bond 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 Pimco Floating and Global Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Floating Income and Global Bond Fund, you can compare the effects of market volatilities on Pimco Floating and Global Bond 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 Pimco Floating with a short position of Global Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Floating and Global Bond.

Diversification Opportunities for Pimco Floating and Global Bond

0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between Pimco and Global is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Floating Income and Global Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Bond Fund and Pimco Floating 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 Pimco Floating Income are associated (or correlated) with Global Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Bond Fund has no effect on the direction of Pimco Floating i.e., Pimco Floating and Global Bond go up and down completely randomly.

Pair Corralation between Pimco Floating and Global Bond

Assuming the 90 days horizon Pimco Floating Income is expected to generate 0.89 times more return on investment than Global Bond. However, Pimco Floating Income is 1.12 times less risky than Global Bond. It trades about 0.14 of its potential returns per unit of risk. Global Bond Fund is currently generating about 0.1 per unit of risk. If you would invest  710.00  in Pimco Floating Income on August 28, 2024 and sell it today you would earn a total of  101.00  from holding Pimco Floating Income or generate 14.23% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Pimco Floating Income  vs.  Global Bond Fund

 Performance 
       Timeline  
Pimco Floating Income 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Floating Income are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pimco Floating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Global Bond Fund 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Global Bond Fund are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Global Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pimco Floating and Global Bond Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pimco Floating and Global Bond

The main advantage of trading using opposite Pimco Floating and Global Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Floating position performs unexpectedly, Global Bond 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 Global Bond will offset losses from the drop in Global Bond's long position.
The idea behind Pimco Floating Income and Global Bond Fund 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.
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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