Correlation Between Australian REIT and PIMCO Global

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

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

Diversification Opportunities for Australian REIT and PIMCO Global

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Correlation Coefficient

Australian REIT  PIMCO Global

Pay attention - limited upside

The 3 months correlation between Australian and PIMCO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Australian REIT Income and PIMCO Global Incme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Global Incme and Australian REIT 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 Australian REIT Income 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 Incme has no effect on the direction of Australian REIT i.e., Australian REIT and PIMCO Global go up and down completely randomly.

Pair Corralation between Australian REIT and PIMCO Global

Assuming the 90 days trading horizon Australian REIT is expected to generate 58.71 times less return on investment than PIMCO Global. In addition to that, Australian REIT is 1.72 times more volatile than PIMCO Global Incme. It trades about 0.0 of its total potential returns per unit of risk. PIMCO Global Incme is currently generating about 0.05 per unit of volatility. If you would invest  618.00  in PIMCO Global Incme on September 4, 2024 and sell it today you would earn a total of  128.00  from holding PIMCO Global Incme or generate 20.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Australian REIT Income  vs.  PIMCO Global Incme

Australian REIT Income

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Australian REIT Income has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Australian REIT is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

PIMCO Global Incme

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days PIMCO Global Incme has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong forward indicators, PIMCO Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Australian REIT and PIMCO Global

The main advantage of trading using opposite Australian REIT and PIMCO Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian REIT 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 Australian REIT Income and PIMCO Global Incme 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.