Correlation Between PIMCO Global and Global X

Can any of the company-specific risk be diversified away by investing in both PIMCO Global and Global X 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 Global X 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 Global X 7 10, you can compare the effects of market volatilities on PIMCO Global and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Global and Global X.

Diversification Opportunities for PIMCO Global and Global X

-0.31

Correlation Coefficient

PIMCO Global  Global X

Very good diversification

The 3 months correlation between PIMCO and Global is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Global Short and Global X 7 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X 7 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X 7 has no effect on the direction of PIMCO Global i.e., PIMCO Global and Global X go up and down completely randomly.

Pair Corralation between PIMCO Global and Global X

Assuming the 90 days trading horizon PIMCO Global is expected to generate 311.0 times less return on investment than Global X. But when comparing it to its historical volatility, PIMCO Global Short is 1.35 times less risky than Global X. It trades about 0.0 of its potential returns per unit of risk. Global X 7 10 is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  5,774  in Global X 7 10 on September 5, 2024 and sell it today you would earn a total of  119.00  from holding Global X 7 10 or generate 2.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

PIMCO Global Short  vs.  Global X 7 10

PIMCO Global Short

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Global Short are ranked lower than 5 (%) 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.

Global X 7

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global X 7 10 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, Global X 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 Global X

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

The idea behind PIMCO Global Short and Global X 7 10 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.