Correlation Between PIMCO Global and CI Enhanced

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

By analyzing existing cross correlation between PIMCO Global Short and CI Enhanced Government, you can compare the effects of market volatilities on PIMCO Global and CI Enhanced 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 CI Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Global and CI Enhanced.

Diversification Opportunities for PIMCO Global and CI Enhanced

-0.54

Correlation Coefficient

PIMCO Global  CI Enhanced

Excellent diversification

The 3 months correlation between PIMCO and FGO is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Global Short and CI Enhanced Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Enhanced Government 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 Short are associated (or correlated) with CI Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Enhanced Government has no effect on the direction of PIMCO Global i.e., PIMCO Global and CI Enhanced go up and down completely randomly.

Pair Corralation between PIMCO Global and CI Enhanced

Assuming the 90 days trading horizon PIMCO Global Short is expected to generate 0.45 times more return on investment than CI Enhanced. However, PIMCO Global Short is 2.21 times less risky than CI Enhanced. It trades about 0.12 of its potential returns per unit of risk. CI Enhanced Government is currently generating about -0.1 per unit of risk. If you would invest  1,898  in PIMCO Global Short on September 14, 2024 and sell it today you would earn a total of  21.00  from holding PIMCO Global Short or generate 1.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

PIMCO Global Short  vs.  CI Enhanced Government

PIMCO Global Short

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Global Short are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, PIMCO Global is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

CI Enhanced Government

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CI Enhanced Government has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, CI Enhanced is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with PIMCO Global and CI Enhanced

The main advantage of trading using opposite PIMCO Global and CI Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO Global position performs unexpectedly, CI Enhanced 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 CI Enhanced will offset losses from the drop in CI Enhanced's long position.

The idea behind PIMCO Global Short and CI Enhanced Government 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.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.