Correlation Between PIMCO Mortgage and Global X

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

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

Diversification Opportunities for PIMCO Mortgage and Global X

0.91

Correlation Coefficient

PIMCO Mortgage  Global X

Almost no diversification

The 3 months correlation between PIMCO and Global is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Mortgage Backed Securiti and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds and PIMCO Mortgage 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 Mortgage Backed Securities are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Funds has no effect on the direction of PIMCO Mortgage i.e., PIMCO Mortgage and Global X go up and down completely randomly.

Pair Corralation between PIMCO Mortgage and Global X

Given the investment horizon of 90 days PIMCO Mortgage Backed Securities is expected to generate 15.13 times more return on investment than Global X. However, PIMCO Mortgage is 15.13 times more volatile than Global X Funds. It trades about 0.15 of its potential returns per unit of risk. Global X Funds is currently generating about 0.78 per unit of risk. If you would invest  4,735  in PIMCO Mortgage Backed Securities on December 27, 2024 and sell it today you would earn a total of  138.00  from holding PIMCO Mortgage Backed Securities or generate 2.91% return on investment over 90 days.

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

PIMCO Mortgage Backed Securiti  vs.  Global X Funds

PIMCO Mortgage Backed

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Mortgage Backed Securities are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, PIMCO Mortgage is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Global X Funds

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Funds are ranked lower than 60 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward indicators, Global X is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with PIMCO Mortgage and Global X

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

The idea behind PIMCO Mortgage Backed Securities and Global X Funds 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 Commodity Directory module to find actively traded commodities issued by global exchanges.