Correlation Between American Funds and Pimco Global
Can any of the company-specific risk be diversified away by investing in both American Funds and Pimco Global 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 American Funds and Pimco Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Retirement and Pimco Global Bond, you can compare the effects of market volatilities on American Funds and Pimco Global 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 American Funds with a short position of Pimco Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Pimco Global.
Diversification Opportunities for American Funds and Pimco Global
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Pimco is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Retirement and Pimco Global Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Global Bond and American Funds 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 American Funds Retirement are associated (or correlated) with Pimco Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Global Bond has no effect on the direction of American Funds i.e., American Funds and Pimco Global go up and down completely randomly.
Pair Corralation between American Funds and Pimco Global
Assuming the 90 days horizon American Funds Retirement is expected to generate 2.18 times more return on investment than Pimco Global. However, American Funds is 2.18 times more volatile than Pimco Global Bond. It trades about 0.24 of its potential returns per unit of risk. Pimco Global Bond is currently generating about 0.14 per unit of risk. If you would invest 1,251 in American Funds Retirement on November 4, 2024 and sell it today you would earn a total of 27.00 from holding American Funds Retirement or generate 2.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
American Funds Retirement vs. Pimco Global Bond
Performance |
| Timeline |
| American Funds Retirement |
| Pimco Global Bond |
American Funds and Pimco Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Pimco Global
The main advantage of trading using opposite American Funds and Pimco Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Pimco Global 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 Global will offset losses from the drop in Pimco Global's long position.| American Funds vs. Gmo Global Equity | American Funds vs. Investec Global Franchise | American Funds vs. Kinetics Global Fund | American Funds vs. Ab Global Bond |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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