Correlation Between IShares Treasury and PIMCO Sterling
Can any of the company-specific risk be diversified away by investing in both IShares Treasury and PIMCO Sterling 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 Treasury and PIMCO Sterling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Treasury Bond and PIMCO Sterling Short, you can compare the effects of market volatilities on IShares Treasury and PIMCO Sterling 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 Treasury with a short position of PIMCO Sterling. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Treasury and PIMCO Sterling.
Diversification Opportunities for IShares Treasury and PIMCO Sterling
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IShares and PIMCO is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding iShares Treasury Bond and PIMCO Sterling Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Sterling Short and IShares Treasury 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 Treasury Bond are associated (or correlated) with PIMCO Sterling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Sterling Short has no effect on the direction of IShares Treasury i.e., IShares Treasury and PIMCO Sterling go up and down completely randomly.
Pair Corralation between IShares Treasury and PIMCO Sterling
Assuming the 90 days trading horizon iShares Treasury Bond is expected to under-perform the PIMCO Sterling. In addition to that, IShares Treasury is 29.43 times more volatile than PIMCO Sterling Short. It trades about -0.09 of its total potential returns per unit of risk. PIMCO Sterling Short is currently generating about 0.54 per unit of volatility. If you would invest 10,246 in PIMCO Sterling Short on August 26, 2024 and sell it today you would earn a total of 36.00 from holding PIMCO Sterling Short or generate 0.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Treasury Bond vs. PIMCO Sterling Short
Performance |
| Timeline |
| iShares Treasury Bond |
| PIMCO Sterling Short |
IShares Treasury and PIMCO Sterling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Treasury and PIMCO Sterling
The main advantage of trading using opposite IShares Treasury and PIMCO Sterling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Treasury position performs unexpectedly, PIMCO Sterling 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 Sterling will offset losses from the drop in PIMCO Sterling's long position.| IShares Treasury vs. iShares MSCI Japan | IShares Treasury vs. iShares JP Morgan | IShares Treasury vs. iShares MSCI Europe | IShares Treasury vs. iShares Nasdaq Biotechnology |
| PIMCO Sterling vs. Leverage Shares 3x | PIMCO Sterling vs. Leverage Shares 3x | PIMCO Sterling vs. Leverage Shares 3x | PIMCO Sterling vs. WisdomTree Short GBP |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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