Correlation Between PIMCO ETF and AltShares Event
Can any of the company-specific risk be diversified away by investing in both PIMCO ETF and AltShares Event 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 AltShares Event 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 AltShares Event Driven ETF, you can compare the effects of market volatilities on PIMCO ETF and AltShares Event 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 AltShares Event. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO ETF and AltShares Event.
Diversification Opportunities for PIMCO ETF and AltShares Event
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PIMCO and AltShares is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO ETF Trust and AltShares Event Driven ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AltShares Event Driven 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 AltShares Event. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AltShares Event Driven has no effect on the direction of PIMCO ETF i.e., PIMCO ETF and AltShares Event go up and down completely randomly.
Pair Corralation between PIMCO ETF and AltShares Event
Given the investment horizon of 90 days PIMCO ETF is expected to generate 2.13 times less return on investment than AltShares Event. But when comparing it to its historical volatility, PIMCO ETF Trust is 3.12 times less risky than AltShares Event. It trades about 0.25 of its potential returns per unit of risk. AltShares Event Driven ETF is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 986.00 in AltShares Event Driven ETF on September 1, 2024 and sell it today you would earn a total of 91.00 from holding AltShares Event Driven ETF or generate 9.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PIMCO ETF Trust vs. AltShares Event Driven ETF
Performance |
| Timeline |
| PIMCO ETF Trust |
| AltShares Event Driven |
PIMCO ETF and AltShares Event Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIMCO ETF and AltShares Event
The main advantage of trading using opposite PIMCO ETF and AltShares Event positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO ETF position performs unexpectedly, AltShares Event 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 AltShares Event will offset losses from the drop in AltShares Event'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 |
| AltShares Event vs. First Trust Managed | AltShares Event vs. Franklin Liberty Systematic | AltShares Event vs. Overlay Shares Foreign | AltShares Event vs. First Trust LongShort |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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