Correlation Between Global Bond and Pimco Long
Can any of the company-specific risk be diversified away by investing in both Global Bond and Pimco Long 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 Bond and Pimco Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Bond Fund and Pimco Long Duration, you can compare the effects of market volatilities on Global Bond and Pimco Long 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 Bond with a short position of Pimco Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Bond and Pimco Long.
Diversification Opportunities for Global Bond and Pimco Long
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Pimco is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Global Bond Fund and Pimco Long Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Long Duration and Global Bond 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 Bond Fund are associated (or correlated) with Pimco Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Long Duration has no effect on the direction of Global Bond i.e., Global Bond and Pimco Long go up and down completely randomly.
Pair Corralation between Global Bond and Pimco Long
Assuming the 90 days horizon Global Bond is expected to generate 3.8 times less return on investment than Pimco Long. But when comparing it to its historical volatility, Global Bond Fund is 5.87 times less risky than Pimco Long. It trades about 0.13 of its potential returns per unit of risk. Pimco Long Duration is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 719.00 in Pimco Long Duration on August 30, 2024 and sell it today you would earn a total of 11.00 from holding Pimco Long Duration or generate 1.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Bond Fund vs. Pimco Long Duration
Performance |
| Timeline |
| Global Bond Fund |
| Pimco Long Duration |
Global Bond and Pimco Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Bond and Pimco Long
The main advantage of trading using opposite Global Bond and Pimco Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Bond position performs unexpectedly, Pimco Long 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 Long will offset losses from the drop in Pimco Long's long position.| Global Bond vs. Global Gold Fund | Global Bond vs. Gold Portfolio Fidelity | Global Bond vs. Gamco Global Gold | Global Bond vs. First Eagle Gold |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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