Correlation Between Global Bond and Pimco Stocksplus
Can any of the company-specific risk be diversified away by investing in both Global Bond and Pimco Stocksplus 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 Stocksplus 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 Stocksplus Long, you can compare the effects of market volatilities on Global Bond and Pimco Stocksplus 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 Stocksplus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Bond and Pimco Stocksplus.
Diversification Opportunities for Global Bond and Pimco Stocksplus
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Pimco is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Global Bond Fund and Pimco Stocksplus Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Stocksplus Long 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 Stocksplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Stocksplus Long has no effect on the direction of Global Bond i.e., Global Bond and Pimco Stocksplus go up and down completely randomly.
Pair Corralation between Global Bond and Pimco Stocksplus
Assuming the 90 days horizon Global Bond is expected to generate 6.68 times less return on investment than Pimco Stocksplus. But when comparing it to its historical volatility, Global Bond Fund is 6.1 times less risky than Pimco Stocksplus. It trades about 0.06 of its potential returns per unit of risk. Pimco Stocksplus Long is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,718 in Pimco Stocksplus Long on August 28, 2024 and sell it today you would earn a total of 70.00 from holding Pimco Stocksplus Long or generate 4.07% 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 Stocksplus Long
Performance |
| Timeline |
| Global Bond Fund |
| Pimco Stocksplus Long |
Global Bond and Pimco Stocksplus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Bond and Pimco Stocksplus
The main advantage of trading using opposite Global Bond and Pimco Stocksplus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Bond position performs unexpectedly, Pimco Stocksplus 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 Stocksplus will offset losses from the drop in Pimco Stocksplus' long position.| Global Bond vs. Pimco Rae Worldwide | Global Bond vs. Pimco Rae Worldwide | Global Bond vs. Pimco Rae Worldwide | Global Bond vs. Pimco Rae Worldwide |
| Pimco Stocksplus vs. WisdomTree 9060 Balanced | Pimco Stocksplus vs. American Beacon Global | Pimco Stocksplus vs. Pimco Small Cap | Pimco Stocksplus vs. Pimco International Stocksplus |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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