Correlation Between VanEck ETF and PIMCO ETF
Can any of the company-specific risk be diversified away by investing in both VanEck ETF and PIMCO ETF 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 VanEck ETF and PIMCO ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck ETF Trust and PIMCO ETF Trust, you can compare the effects of market volatilities on VanEck ETF and PIMCO ETF 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 VanEck ETF with a short position of PIMCO ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck ETF and PIMCO ETF.
Diversification Opportunities for VanEck ETF and PIMCO ETF
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between VanEck and PIMCO is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding VanEck ETF Trust and PIMCO ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO ETF Trust and VanEck ETF 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 VanEck ETF Trust are associated (or correlated) with PIMCO ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO ETF Trust has no effect on the direction of VanEck ETF i.e., VanEck ETF and PIMCO ETF go up and down completely randomly.
Pair Corralation between VanEck ETF and PIMCO ETF
Given the investment horizon of 90 days VanEck ETF is expected to generate 1.94 times less return on investment than PIMCO ETF. But when comparing it to its historical volatility, VanEck ETF Trust is 1.26 times less risky than PIMCO ETF. It trades about 0.68 of its potential returns per unit of risk. PIMCO ETF Trust is currently generating about 1.04 of returns per unit of risk over similar time horizon. If you would invest 5,090 in PIMCO ETF Trust on September 1, 2024 and sell it today you would earn a total of 69.00 from holding PIMCO ETF Trust or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
VanEck ETF Trust vs. PIMCO ETF Trust
Performance |
| Timeline |
| VanEck ETF Trust |
| PIMCO ETF Trust |
VanEck ETF and PIMCO ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck ETF and PIMCO ETF
The main advantage of trading using opposite VanEck ETF and PIMCO ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck ETF position performs unexpectedly, PIMCO ETF 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 ETF will offset losses from the drop in PIMCO ETF's long position.| VanEck ETF vs. iShares Interest Rate | VanEck ETF vs. iShares Interest Rate | VanEck ETF vs. iShares Edge Investment | VanEck ETF vs. iShares Inflation Hedged |
| PIMCO ETF vs. VanEck ETF Trust | PIMCO ETF vs. PGIM ETF Trust | PIMCO ETF vs. Janus Detroit Street | PIMCO ETF vs. Janus Detroit Street |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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