Correlation Between Global Core and Pimco California

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

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

Diversification Opportunities for Global Core and Pimco California

-0.47

Correlation Coefficient

Global Core  Pimco California

Very good diversification

The 3 months correlation between Global and Pimco is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Global E Portfolio and Pimco California Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco California Mun and Global Core 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 Global E Portfolio are associated (or correlated) with Pimco California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco California Mun has no effect on the direction of Global Core i.e., Global Core and Pimco California go up and down completely randomly.

Pair Corralation between Global Core and Pimco California

Assuming the 90 days horizon Global E Portfolio is expected to generate 1.24 times more return on investment than Pimco California. However, Global Core is 1.24 times more volatile than Pimco California Municipal. It trades about 0.17 of its potential returns per unit of risk. Pimco California Municipal is currently generating about 0.0 per unit of risk. If you would invest  1,987  in Global E Portfolio on September 2, 2024 and sell it today you would earn a total of  167.00  from holding Global E Portfolio or generate 8.4% return on investment over 90 days.

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

Global E Portfolio  vs.  Pimco California Municipal

Global E Portfolio

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global E Portfolio are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Global Core may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pimco California Mun

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco California Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound basic indicators, Pimco California is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Global Core and Pimco California

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

The idea behind Global E Portfolio and Pimco California Municipal 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.