Correlation Between IShares Trust and PIMCO ETF
Can any of the company-specific risk be diversified away by investing in both IShares Trust and PIMCO 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 IShares Trust and PIMCO ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and PIMCO ETF Trust, you can compare the effects of market volatilities on IShares Trust and PIMCO 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 IShares Trust with a short position of PIMCO ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and PIMCO ETF.
Diversification Opportunities for IShares Trust and PIMCO ETF
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IShares and PIMCO is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and PIMCO ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO ETF Trust and IShares Trust 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 Trust are associated (or correlated) with PIMCO ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO ETF Trust has no effect on the direction of IShares Trust i.e., IShares Trust and PIMCO ETF go up and down completely randomly.
Pair Corralation between IShares Trust and PIMCO ETF
Given the investment horizon of 90 days IShares Trust is expected to generate 1.53 times less return on investment than PIMCO ETF. In addition to that, IShares Trust is 2.1 times more volatile than PIMCO ETF Trust. It trades about 0.08 of its total potential returns per unit of risk. PIMCO ETF Trust is currently generating about 0.25 per unit of volatility. 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 Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. PIMCO ETF Trust
Performance |
| Timeline |
| iShares Trust |
| PIMCO ETF Trust |
IShares Trust and PIMCO ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and PIMCO ETF
The main advantage of trading using opposite IShares Trust and PIMCO ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust position performs unexpectedly, PIMCO 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 PIMCO ETF will offset losses from the drop in PIMCO ETF's long position.| IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. Simplify Volatility Premium | IShares Trust vs. Tidal Trust II |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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