Correlation Between Pimco Real and Goldman Sachs

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

By analyzing existing cross correlation between Pimco Real Return and Goldman Sachs Inflation, you can compare the effects of market volatilities on Pimco Real and Goldman Sachs 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 Real with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco Real and Goldman Sachs.

Diversification Opportunities for Pimco Real and Goldman Sachs

0.97

Correlation Coefficient

Pimco Real  Goldman Sachs

Almost no diversification

The 3 months correlation between Pimco and Goldman is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Real Return and Goldman Sachs Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Inflation and Pimco Real 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 Real Return are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Inflation has no effect on the direction of Pimco Real i.e., Pimco Real and Goldman Sachs go up and down completely randomly.

Pair Corralation between Pimco Real and Goldman Sachs

Assuming the 90 days horizon Pimco Real Return is expected to under-perform the Goldman Sachs. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pimco Real Return is 1.06 times less risky than Goldman Sachs. The mutual fund trades about -0.19 of its potential returns per unit of risk. The Goldman Sachs Inflation is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  949.00  in Goldman Sachs Inflation on January 25, 2024 and sell it today you would lose (11.00) from holding Goldman Sachs Inflation or give up 1.16% of portfolio value over 90 days.

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

Pimco Real Return  vs.  Goldman Sachs Inflation

Pimco Real Return

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco Real Return has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Pimco Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Goldman Sachs Inflation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Inflation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Goldman Sachs 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 Real and Goldman Sachs

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

The idea behind Pimco Real Return and Goldman Sachs Inflation 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.