Correlation Between Pimco Unconstrained and Gnma Fund

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

By analyzing existing cross correlation between Pimco Unconstrained Bond and Gnma Fund Institutional, you can compare the effects of market volatilities on Pimco Unconstrained and Gnma Fund 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 Unconstrained with a short position of Gnma Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Unconstrained and Gnma Fund.

Diversification Opportunities for Pimco Unconstrained and Gnma Fund

0.96

Correlation Coefficient

Pimco Unconstrained  Gnma Fund

Almost no diversification

The 3 months correlation between Pimco and Gnma is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Unconstrained Bond and Gnma Fund Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gnma Fund Institutional and Pimco Unconstrained 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 Unconstrained Bond are associated (or correlated) with Gnma Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gnma Fund Institutional has no effect on the direction of Pimco Unconstrained i.e., Pimco Unconstrained and Gnma Fund go up and down completely randomly.

Pair Corralation between Pimco Unconstrained and Gnma Fund

Assuming the 90 days horizon Pimco Unconstrained is expected to generate 1.41 times less return on investment than Gnma Fund. But when comparing it to its historical volatility, Pimco Unconstrained Bond is 2.07 times less risky than Gnma Fund. It trades about 0.22 of its potential returns per unit of risk. Gnma Fund Institutional is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  905.00  in Gnma Fund Institutional on December 27, 2024 and sell it today you would earn a total of  28.00  from holding Gnma Fund Institutional or generate 3.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

Pimco Unconstrained Bond  vs.  Gnma Fund Institutional

Pimco Unconstrained Bond

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Unconstrained Bond are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pimco Unconstrained is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gnma Fund Institutional

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gnma Fund Institutional are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Gnma Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pimco Unconstrained and Gnma Fund

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

The idea behind Pimco Unconstrained Bond and Gnma Fund Institutional 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..