Correlation Between Pimco Global and Pimco Income

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

By analyzing existing cross correlation between Pimco Global Stocksplus and Pimco Income Strategy, you can compare the effects of market volatilities on Pimco Global and Pimco Income 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 Pimco Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Global and Pimco Income.

Diversification Opportunities for Pimco Global and Pimco Income

0.73

Correlation Coefficient

Pimco Global  Pimco Income

Poor diversification

The 3 months correlation between Pimco and Pimco is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Global Stocksplus and Pimco Income Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Income Strategy 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 Stocksplus are associated (or correlated) with Pimco Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Income Strategy has no effect on the direction of Pimco Global i.e., Pimco Global and Pimco Income go up and down completely randomly.

Pair Corralation between Pimco Global and Pimco Income

Considering the 90-day investment horizon Pimco Global Stocksplus is expected to generate 1.46 times more return on investment than Pimco Income. However, Pimco Global is 1.46 times more volatile than Pimco Income Strategy. It trades about 0.07 of its potential returns per unit of risk. Pimco Income Strategy is currently generating about 0.07 per unit of risk. If you would invest  562.00  in Pimco Global Stocksplus on August 31, 2024 and sell it today you would earn a total of  252.00  from holding Pimco Global Stocksplus or generate 44.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Pimco Global Stocksplus  vs.  Pimco Income Strategy

Pimco Global Stocksplus

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Global Stocksplus are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively invariable technical and fundamental indicators, Pimco Global is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pimco Income Strategy

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Income Strategy are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Pimco Income is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Pimco Global and Pimco Income

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

The idea behind Pimco Global Stocksplus and Pimco Income Strategy 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.