Correlation Between Pimco Foreign and Global Bond
Can any of the company-specific risk be diversified away by investing in both Pimco Foreign 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 Foreign 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 Foreign Bond and Global Bond Fund, you can compare the effects of market volatilities on Pimco Foreign 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 Foreign with a short position of Global Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Foreign and Global Bond.
Diversification Opportunities for Pimco Foreign 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 Foreign Bond 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 Foreign 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 Foreign Bond 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 Foreign i.e., Pimco Foreign and Global Bond go up and down completely randomly.
Pair Corralation between Pimco Foreign and Global Bond
Assuming the 90 days horizon Pimco Foreign Bond is expected to generate 1.15 times more return on investment than Global Bond. However, Pimco Foreign is 1.15 times more volatile than Global Bond Fund. It trades about 0.19 of its potential returns per unit of risk. Global Bond Fund is currently generating about 0.13 per unit of risk. If you would invest 990.00 in Pimco Foreign Bond on August 28, 2024 and sell it today you would earn a total of 7.00 from holding Pimco Foreign Bond or generate 0.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Foreign Bond vs. Global Bond Fund
Performance |
| Timeline |
| Pimco Foreign Bond |
| Global Bond Fund |
Pimco Foreign and Global Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Foreign and Global Bond
The main advantage of trading using opposite Pimco Foreign and Global Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Foreign 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.| Pimco Foreign vs. Pimco Rae Worldwide | Pimco Foreign vs. Pimco Rae Worldwide | Pimco Foreign vs. Pimco Rae Worldwide | Pimco Foreign vs. Pimco Rae Worldwide |
| Global Bond vs. Pimco Rae Worldwide | Global Bond vs. Pimco Rae Worldwide | Global Bond vs. Pimco Rae Worldwide | Global Bond vs. Pimco Rae Worldwide |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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