Correlation Between IShares Core and PIMCO Short
Can any of the company-specific risk be diversified away by investing in both IShares Core and PIMCO Short 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 Core and PIMCO Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core MSCI and PIMCO Short Term High, you can compare the effects of market volatilities on IShares Core and PIMCO Short 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 Core with a short position of PIMCO Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and PIMCO Short.
Diversification Opportunities for IShares Core and PIMCO Short
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between IShares and PIMCO is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and PIMCO Short Term High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Short Term and IShares Core 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 Core MSCI are associated (or correlated) with PIMCO Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Short Term has no effect on the direction of IShares Core i.e., IShares Core and PIMCO Short go up and down completely randomly.
Pair Corralation between IShares Core and PIMCO Short
Assuming the 90 days trading horizon iShares Core MSCI is expected to under-perform the PIMCO Short. In addition to that, IShares Core is 4.54 times more volatile than PIMCO Short Term High. It trades about -0.1 of its total potential returns per unit of risk. PIMCO Short Term High is currently generating about 0.17 per unit of volatility. If you would invest 11,800 in PIMCO Short Term High on September 1, 2024 and sell it today you would earn a total of 100.00 from holding PIMCO Short Term High or generate 0.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core MSCI vs. PIMCO Short Term High
Performance |
| Timeline |
| iShares Core MSCI |
| PIMCO Short Term |
IShares Core and PIMCO Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and PIMCO Short
The main advantage of trading using opposite IShares Core and PIMCO Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, PIMCO Short 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 Short will offset losses from the drop in PIMCO Short's long position.| IShares Core vs. iShares Corp Bond | IShares Core vs. iShares Emerging Asia | IShares Core vs. iShares MSCI Global | IShares Core vs. iShares VII PLC |
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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