Correlation Between Pimco Global and Foreign Bond
Can any of the company-specific risk be diversified away by investing in both Pimco Global and Foreign 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 Global and Foreign Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Global Bond and Foreign Bond Fund, you can compare the effects of market volatilities on Pimco Global and Foreign 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 Global with a short position of Foreign Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Global and Foreign Bond.
Diversification Opportunities for Pimco Global and Foreign Bond
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pimco and Foreign is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Global Bond and Foreign Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foreign Bond and Pimco Global 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 Global Bond are associated (or correlated) with Foreign Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foreign Bond has no effect on the direction of Pimco Global i.e., Pimco Global and Foreign Bond go up and down completely randomly.
Pair Corralation between Pimco Global and Foreign Bond
Assuming the 90 days horizon Pimco Global is expected to generate 2.09 times less return on investment than Foreign Bond. But when comparing it to its historical volatility, Pimco Global Bond is 2.21 times less risky than Foreign Bond. It trades about 0.13 of its potential returns per unit of risk. Foreign Bond Fund is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 734.00 in Foreign Bond Fund on November 4, 2024 and sell it today you would earn a total of 8.00 from holding Foreign Bond Fund or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco Global Bond vs. Foreign Bond Fund
Performance |
| Timeline |
| Pimco Global Bond |
| Foreign Bond |
Pimco Global and Foreign Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco Global and Foreign Bond
The main advantage of trading using opposite Pimco Global and Foreign Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Global position performs unexpectedly, Foreign 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 Foreign Bond will offset losses from the drop in Foreign Bond's long position.| Pimco Global vs. Pimco Rae Worldwide | Pimco Global vs. Pimco Rae Worldwide | Pimco Global vs. Pimco Rae Worldwide | Pimco Global vs. Pimco Rae Worldwide |
| Foreign Bond vs. Pimco Rae Worldwide | Foreign Bond vs. Pimco Realestaterealreturn Strategy | Foreign Bond vs. Pimco Rae Worldwide | Foreign 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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