Correlation Between PIMCO Enhanced and FlexShares IBoxx
Can any of the company-specific risk be diversified away by investing in both PIMCO Enhanced and FlexShares IBoxx 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 PIMCO Enhanced and FlexShares IBoxx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PIMCO Enhanced Low and FlexShares iBoxx 5 Year, you can compare the effects of market volatilities on PIMCO Enhanced and FlexShares IBoxx 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 PIMCO Enhanced with a short position of FlexShares IBoxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Enhanced and FlexShares IBoxx.
Diversification Opportunities for PIMCO Enhanced and FlexShares IBoxx
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PIMCO and FlexShares is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Enhanced Low and FlexShares iBoxx 5 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares iBoxx 5 and PIMCO Enhanced 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 PIMCO Enhanced Low are associated (or correlated) with FlexShares IBoxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares iBoxx 5 has no effect on the direction of PIMCO Enhanced i.e., PIMCO Enhanced and FlexShares IBoxx go up and down completely randomly.
Pair Corralation between PIMCO Enhanced and FlexShares IBoxx
Given the investment horizon of 90 days PIMCO Enhanced Low is expected to generate 0.41 times more return on investment than FlexShares IBoxx. However, PIMCO Enhanced Low is 2.44 times less risky than FlexShares IBoxx. It trades about 0.18 of its potential returns per unit of risk. FlexShares iBoxx 5 Year is currently generating about 0.05 per unit of risk. If you would invest 8,736 in PIMCO Enhanced Low on August 31, 2024 and sell it today you would earn a total of 806.00 from holding PIMCO Enhanced Low or generate 9.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PIMCO Enhanced Low vs. FlexShares iBoxx 5 Year
Performance |
| Timeline |
| PIMCO Enhanced Low |
| FlexShares iBoxx 5 |
PIMCO Enhanced and FlexShares IBoxx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIMCO Enhanced and FlexShares IBoxx
The main advantage of trading using opposite PIMCO Enhanced and FlexShares IBoxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO Enhanced position performs unexpectedly, FlexShares IBoxx 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 FlexShares IBoxx will offset losses from the drop in FlexShares IBoxx's long position.| PIMCO Enhanced vs. Vanguard Intermediate Term Corporate | PIMCO Enhanced vs. Vanguard Short Term Bond | PIMCO Enhanced vs. Vanguard Long Term Corporate | PIMCO Enhanced vs. Vanguard Short Term Treasury |
| FlexShares IBoxx vs. Vanguard Short Term Inflation Protected | FlexShares IBoxx vs. iShares TIPS Bond | FlexShares IBoxx vs. Invesco PureBeta 0 5 | FlexShares IBoxx vs. Goldman Sachs Access |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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