Correlation Between Dow Jones and PIMCO ETFs
Can any of the company-specific risk be diversified away by investing in both Dow Jones and PIMCO ETFs 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 Dow Jones and PIMCO ETFs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and PIMCO ETFs plc, you can compare the effects of market volatilities on Dow Jones and PIMCO ETFs 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 Dow Jones with a short position of PIMCO ETFs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and PIMCO ETFs.
Diversification Opportunities for Dow Jones and PIMCO ETFs
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dow and PIMCO is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and PIMCO ETFs plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO ETFs plc and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with PIMCO ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO ETFs plc has no effect on the direction of Dow Jones i.e., Dow Jones and PIMCO ETFs go up and down completely randomly.
Pair Corralation between Dow Jones and PIMCO ETFs
Assuming the 90 days trading horizon Dow Jones Industrial is expected to under-perform the PIMCO ETFs. In addition to that, Dow Jones is 1.52 times more volatile than PIMCO ETFs plc. It trades about -0.01 of its total potential returns per unit of risk. PIMCO ETFs plc is currently generating about 0.07 per unit of volatility. If you would invest 8,600 in PIMCO ETFs plc on September 14, 2024 and sell it today you would earn a total of 48.00 from holding PIMCO ETFs plc or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dow Jones Industrial vs. PIMCO ETFs plc
Performance |
| Timeline |
Dow Jones and PIMCO ETFs Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
PIMCO ETFs plc
Pair trading matchups for PIMCO ETFs
Pair Trading with Dow Jones and PIMCO ETFs
The main advantage of trading using opposite Dow Jones and PIMCO ETFs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, PIMCO ETFs 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 ETFs will offset losses from the drop in PIMCO ETFs' long position.| Dow Jones vs. Hurco Companies | Dow Jones vs. Tyson Foods | Dow Jones vs. MYR Group | Dow Jones vs. Cannae Holdings |
| PIMCO ETFs vs. PIMCO Dollar Short | PIMCO ETFs vs. PIMCO Low Duration | PIMCO ETFs vs. PIMCO Short Term High | PIMCO ETFs vs. PIMCO Emerging Markets |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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