Correlation Between Pimco Energy and Templeton Global

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Can any of the company-specific risk be diversified away by investing in both Pimco Energy and Templeton 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 Energy and Templeton Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco Energy Tactical and Templeton Global Bond, you can compare the effects of market volatilities on Pimco Energy and Templeton 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 Energy with a short position of Templeton Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Energy and Templeton Global.

Diversification Opportunities for Pimco Energy and Templeton Global

PimcoTempletonDiversified AwayPimcoTempletonDiversified Away100%
-0.46
  Correlation Coefficient

Very good diversification

The 3 months correlation between Pimco and Templeton is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Energy Tactical and Templeton Global Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Global Bond and Pimco Energy 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 Energy Tactical are associated (or correlated) with Templeton Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Global Bond has no effect on the direction of Pimco Energy i.e., Pimco Energy and Templeton Global go up and down completely randomly.

Pair Corralation between Pimco Energy and Templeton Global

Considering the 90-day investment horizon Pimco Energy Tactical is expected to generate 7.56 times more return on investment than Templeton Global. However, Pimco Energy is 7.56 times more volatile than Templeton Global Bond. It trades about 0.0 of its potential returns per unit of risk. Templeton Global Bond is currently generating about 0.01 per unit of risk. If you would invest  2,585  in Pimco Energy Tactical on November 24, 2024 and sell it today you would lose (80.00) from holding Pimco Energy Tactical or give up 3.09% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Pimco Energy Tactical  vs.  Templeton Global Bond

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -5051015202530
JavaScript chart by amCharts 3.21.15PDX TGBAX
       Timeline  
Pimco Energy Tactical 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Pimco Energy Tactical has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Pimco Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb242526272829303132
Templeton Global Bond 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Templeton Global Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Templeton Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb6.46.456.56.556.66.656.76.75

Pimco Energy and Templeton Global Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-10.86-8.13-5.41-2.680.04542.725.498.2611.03 0.51.01.5
JavaScript chart by amCharts 3.21.15PDX TGBAX
       Returns  

Pair Trading with Pimco Energy and Templeton Global

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

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