Correlation Between Global Bond and Pimco Total
Can any of the company-specific risk be diversified away by investing in both Global Bond and Pimco Total 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 Total 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 Total Return, you can compare the effects of market volatilities on Global Bond and Pimco Total 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 Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Bond and Pimco Total.
Diversification Opportunities for Global Bond and Pimco Total
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and Pimco is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Global Bond Fund and Pimco Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Total Return 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 Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Total Return has no effect on the direction of Global Bond i.e., Global Bond and Pimco Total go up and down completely randomly.
Pair Corralation between Global Bond and Pimco Total
Assuming the 90 days horizon Global Bond is expected to generate 1.13 times less return on investment than Pimco Total. But when comparing it to its historical volatility, Global Bond Fund is 2.88 times less risky than Pimco Total. It trades about 0.26 of its potential returns per unit of risk. Pimco Total Return is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 856.00 in Pimco Total Return on August 31, 2024 and sell it today you would earn a total of 7.00 from holding Pimco Total Return or generate 0.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Bond Fund vs. Pimco Total Return
Performance |
| Timeline |
| Global Bond Fund |
| Pimco Total Return |
Global Bond and Pimco Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Bond and Pimco Total
The main advantage of trading using opposite Global Bond and Pimco Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Bond position performs unexpectedly, Pimco Total 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 Total will offset losses from the drop in Pimco Total's long position.| Global Bond vs. Columbia Real Estate | Global Bond vs. Jhancock Real Estate | Global Bond vs. Forum Real Estate | Global Bond vs. Goldman Sachs Real |
| Pimco Total vs. Gmo High Yield | Pimco Total vs. Dunham High Yield | Pimco Total vs. Mesirow Financial High | Pimco Total vs. Alpine High Yield |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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