Correlation Between PIMCO ETF and VanEck ETF
Can any of the company-specific risk be diversified away by investing in both PIMCO ETF and VanEck ETF 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 ETF and VanEck ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PIMCO ETF Trust and VanEck ETF Trust, you can compare the effects of market volatilities on PIMCO ETF and VanEck ETF 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 ETF with a short position of VanEck ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO ETF and VanEck ETF.
Diversification Opportunities for PIMCO ETF and VanEck ETF
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between PIMCO and VanEck is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO ETF Trust and VanEck ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck ETF Trust and PIMCO ETF 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 ETF Trust are associated (or correlated) with VanEck ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck ETF Trust has no effect on the direction of PIMCO ETF i.e., PIMCO ETF and VanEck ETF go up and down completely randomly.
Pair Corralation between PIMCO ETF and VanEck ETF
Given the investment horizon of 90 days PIMCO ETF Trust is expected to generate 1.95 times more return on investment than VanEck ETF. However, PIMCO ETF is 1.95 times more volatile than VanEck ETF Trust. It trades about 0.25 of its potential returns per unit of risk. VanEck ETF Trust is currently generating about 0.42 per unit of risk. If you would invest 4,947 in PIMCO ETF Trust on September 1, 2024 and sell it today you would earn a total of 212.00 from holding PIMCO ETF Trust or generate 4.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
PIMCO ETF Trust vs. VanEck ETF Trust
Performance |
| Timeline |
| PIMCO ETF Trust |
| VanEck ETF Trust |
PIMCO ETF and VanEck ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIMCO ETF and VanEck ETF
The main advantage of trading using opposite PIMCO ETF and VanEck ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO ETF position performs unexpectedly, VanEck ETF 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 VanEck ETF will offset losses from the drop in VanEck ETF's long position.| PIMCO ETF vs. VanEck ETF Trust | PIMCO ETF vs. PGIM ETF Trust | PIMCO ETF vs. Janus Detroit Street | PIMCO ETF vs. Janus Detroit Street |
| VanEck ETF vs. iShares Interest Rate | VanEck ETF vs. iShares Interest Rate | VanEck ETF vs. iShares Edge Investment | VanEck ETF vs. iShares Inflation Hedged |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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