Correlation Between Pimco Income and Pimco Global

Can any of the company-specific risk be diversified away by investing in both Pimco Income 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 Pimco Income and Pimco Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pimco Income Strategy and Pimco Global Stocksplus, you can compare the effects of market volatilities on Pimco Income 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 Pimco Income with a short position of Pimco Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Income and Pimco Global.

Diversification Opportunities for Pimco Income and Pimco Global

0.65

Correlation Coefficient

Pimco Income  Pimco Global

Poor diversification

The 3 months correlation between Pimco and Pimco is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Income Strategy and Pimco Global Stocksplus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Global Stocksplus and Pimco Income 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 Income Strategy 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 Stocksplus has no effect on the direction of Pimco Income i.e., Pimco Income and Pimco Global go up and down completely randomly.

Pair Corralation between Pimco Income and Pimco Global

Considering the 90-day investment horizon Pimco Income is expected to generate 1.4 times less return on investment than Pimco Global. But when comparing it to its historical volatility, Pimco Income Strategy is 1.48 times less risky than Pimco Global. It trades about 0.08 of its potential returns per unit of risk. Pimco Global Stocksplus is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  555.00  in Pimco Global Stocksplus on September 15, 2024 and sell it today you would earn a total of  248.00  from holding Pimco Global Stocksplus or generate 44.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Pimco Income Strategy  vs.  Pimco Global Stocksplus

Pimco Income Strategy

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Income Strategy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Pimco Income is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pimco Global Stocksplus

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Global Stocksplus are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively invariable technical and fundamental indicators, Pimco Global is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Pimco Income and Pimco Global

The main advantage of trading using opposite Pimco Income and Pimco Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Income 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.

The idea behind Pimco Income Strategy and Pimco Global Stocksplus pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.