Correlation Between IShares Yield and PIMCO Enhanced
Can any of the company-specific risk be diversified away by investing in both IShares Yield and PIMCO Enhanced 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 IShares Yield and PIMCO Enhanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Yield Optimized and PIMCO Enhanced Low, you can compare the effects of market volatilities on IShares Yield and PIMCO Enhanced 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 IShares Yield with a short position of PIMCO Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Yield and PIMCO Enhanced.
Diversification Opportunities for IShares Yield and PIMCO Enhanced
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and PIMCO is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding iShares Yield Optimized and PIMCO Enhanced Low in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Enhanced Low and IShares Yield 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 iShares Yield Optimized are associated (or correlated) with PIMCO Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Enhanced Low has no effect on the direction of IShares Yield i.e., IShares Yield and PIMCO Enhanced go up and down completely randomly.
Pair Corralation between IShares Yield and PIMCO Enhanced
Given the investment horizon of 90 days iShares Yield Optimized is expected to generate 2.27 times more return on investment than PIMCO Enhanced. However, IShares Yield is 2.27 times more volatile than PIMCO Enhanced Low. It trades about 0.09 of its potential returns per unit of risk. PIMCO Enhanced Low is currently generating about 0.16 per unit of risk. If you would invest 1,987 in iShares Yield Optimized on September 2, 2024 and sell it today you would earn a total of 278.00 from holding iShares Yield Optimized or generate 13.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Yield Optimized vs. PIMCO Enhanced Low
Performance |
| Timeline |
| iShares Yield Optimized |
| PIMCO Enhanced Low |
IShares Yield and PIMCO Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Yield and PIMCO Enhanced
The main advantage of trading using opposite IShares Yield and PIMCO Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Yield position performs unexpectedly, PIMCO Enhanced 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 Enhanced will offset losses from the drop in PIMCO Enhanced's long position.| IShares Yield vs. iShares Interest Rate | IShares Yield vs. iShares Agency Bond | IShares Yield vs. iShares JP Morgan | IShares Yield vs. iShares Interest Rate |
| PIMCO Enhanced vs. PIMCO Enhanced Short | PIMCO Enhanced vs. SPDR DoubleLine Total | PIMCO Enhanced vs. FlexShares Ready Access | PIMCO Enhanced vs. iShares Ultra Short Term |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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