Correlation Between Dimensional ETF and PIMCO Enhanced
Can any of the company-specific risk be diversified away by investing in both Dimensional ETF 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 Dimensional ETF and PIMCO Enhanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimensional ETF Trust and PIMCO Enhanced Low, you can compare the effects of market volatilities on Dimensional ETF 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 Dimensional ETF with a short position of PIMCO Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional ETF and PIMCO Enhanced.
Diversification Opportunities for Dimensional ETF and PIMCO Enhanced
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dimensional and PIMCO is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional ETF Trust 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 Dimensional 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 Dimensional ETF Trust 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 Dimensional ETF i.e., Dimensional ETF and PIMCO Enhanced go up and down completely randomly.
Pair Corralation between Dimensional ETF and PIMCO Enhanced
Given the investment horizon of 90 days Dimensional ETF Trust is expected to generate 1.44 times more return on investment than PIMCO Enhanced. However, Dimensional ETF is 1.44 times more volatile than PIMCO Enhanced Low. It trades about 0.13 of its potential returns per unit of risk. PIMCO Enhanced Low is currently generating about 0.12 per unit of risk. If you would invest 4,787 in Dimensional ETF Trust on August 28, 2024 and sell it today you would earn a total of 25.00 from holding Dimensional ETF Trust or generate 0.52% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Dimensional ETF Trust vs. PIMCO Enhanced Low
Performance |
Timeline |
Dimensional ETF Trust |
PIMCO Enhanced Low |
Dimensional ETF and PIMCO Enhanced Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dimensional ETF and PIMCO Enhanced
The main advantage of trading using opposite Dimensional ETF and PIMCO Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional ETF 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.Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional Emerging Core |
PIMCO Enhanced vs. Dimensional ETF Trust | PIMCO Enhanced vs. Dimensional ETF Trust | PIMCO Enhanced vs. Dimensional Core Equity | PIMCO Enhanced vs. Dimensional ETF Trust |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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