Correlation Between IShares MSCI and PIMCO Preferred
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and PIMCO Preferred 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 MSCI and PIMCO Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI Canada and PIMCO Preferred And, you can compare the effects of market volatilities on IShares MSCI and PIMCO Preferred 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 MSCI with a short position of PIMCO Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and PIMCO Preferred.
Diversification Opportunities for IShares MSCI and PIMCO Preferred
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and PIMCO is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Canada and PIMCO Preferred And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Preferred And and IShares MSCI 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 MSCI Canada are associated (or correlated) with PIMCO Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Preferred And has no effect on the direction of IShares MSCI i.e., IShares MSCI and PIMCO Preferred go up and down completely randomly.
Pair Corralation between IShares MSCI and PIMCO Preferred
Considering the 90-day investment horizon iShares MSCI Canada is expected to generate 4.35 times more return on investment than PIMCO Preferred. However, IShares MSCI is 4.35 times more volatile than PIMCO Preferred And. It trades about 0.12 of its potential returns per unit of risk. PIMCO Preferred And is currently generating about 0.23 per unit of risk. If you would invest 3,778 in iShares MSCI Canada on August 26, 2024 and sell it today you would earn a total of 519.00 from holding iShares MSCI Canada or generate 13.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI Canada vs. PIMCO Preferred And
Performance |
| Timeline |
| iShares MSCI Canada |
| PIMCO Preferred And |
IShares MSCI and PIMCO Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and PIMCO Preferred
The main advantage of trading using opposite IShares MSCI and PIMCO Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, PIMCO Preferred 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 Preferred will offset losses from the drop in PIMCO Preferred's long position.| IShares MSCI vs. iShares MSCI Hong | IShares MSCI vs. HUMANA INC | IShares MSCI vs. SCOR PK | IShares MSCI vs. Aquagold International |
| PIMCO Preferred vs. ETF Series Solutions | PIMCO Preferred vs. Aquagold International | PIMCO Preferred vs. Morningstar Unconstrained Allocation | PIMCO Preferred vs. High Yield Municipal Fund |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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