Correlation Between SPDR Series and PIMCO Broad
Can any of the company-specific risk be diversified away by investing in both SPDR Series and PIMCO Broad 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 SPDR Series and PIMCO Broad into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Series Trust and PIMCO Broad TIPS, you can compare the effects of market volatilities on SPDR Series and PIMCO Broad 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 SPDR Series with a short position of PIMCO Broad. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Series and PIMCO Broad.
Diversification Opportunities for SPDR Series and PIMCO Broad
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SPDR and PIMCO is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Series Trust and PIMCO Broad TIPS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Broad TIPS and SPDR Series 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 SPDR Series Trust are associated (or correlated) with PIMCO Broad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Broad TIPS has no effect on the direction of SPDR Series i.e., SPDR Series and PIMCO Broad go up and down completely randomly.
Pair Corralation between SPDR Series and PIMCO Broad
Given the investment horizon of 90 days SPDR Series is expected to generate 4.01 times less return on investment than PIMCO Broad. But when comparing it to its historical volatility, SPDR Series Trust is 18.92 times less risky than PIMCO Broad. It trades about 1.21 of its potential returns per unit of risk. PIMCO Broad TIPS is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 5,188 in PIMCO Broad TIPS on November 2, 2024 and sell it today you would earn a total of 63.00 from holding PIMCO Broad TIPS or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Series Trust vs. PIMCO Broad TIPS
Performance |
| Timeline |
| SPDR Series Trust |
| PIMCO Broad TIPS |
SPDR Series and PIMCO Broad Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Series and PIMCO Broad
The main advantage of trading using opposite SPDR Series and PIMCO Broad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Series position performs unexpectedly, PIMCO Broad 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 Broad will offset losses from the drop in PIMCO Broad's long position.| SPDR Series vs. WisdomTree Floating Rate | SPDR Series vs. iShares 0 3 Month | SPDR Series vs. SPDR Bloomberg 1 3 | SPDR Series vs. iShares Treasury Floating |
| PIMCO Broad vs. PIMCO 1 5 Year | PIMCO Broad vs. PIMCO 15 Year | PIMCO Broad vs. SPDR Bloomberg 1 10 | PIMCO Broad vs. FlexShares iBoxx 5 Year |
Check out your portfolio center.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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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