Correlation Between IShares Short and PIMCO Intermediate
Can any of the company-specific risk be diversified away by investing in both IShares Short and PIMCO Intermediate 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 Short and PIMCO Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Short Maturity and PIMCO Intermediate Municipal, you can compare the effects of market volatilities on IShares Short and PIMCO Intermediate 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 Short with a short position of PIMCO Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Short and PIMCO Intermediate.
Diversification Opportunities for IShares Short and PIMCO Intermediate
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between IShares and PIMCO is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding iShares Short Maturity and PIMCO Intermediate Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Intermediate and IShares Short 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 Short Maturity are associated (or correlated) with PIMCO Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Intermediate has no effect on the direction of IShares Short i.e., IShares Short and PIMCO Intermediate go up and down completely randomly.
Pair Corralation between IShares Short and PIMCO Intermediate
Given the investment horizon of 90 days IShares Short is expected to generate 1.69 times less return on investment than PIMCO Intermediate. But when comparing it to its historical volatility, iShares Short Maturity is 3.66 times less risky than PIMCO Intermediate. It trades about 0.29 of its potential returns per unit of risk. PIMCO Intermediate Municipal is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 5,088 in PIMCO Intermediate Municipal on September 1, 2024 and sell it today you would earn a total of 173.00 from holding PIMCO Intermediate Municipal or generate 3.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Short Maturity vs. PIMCO Intermediate Municipal
Performance |
| Timeline |
| iShares Short Maturity |
| PIMCO Intermediate |
IShares Short and PIMCO Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Short and PIMCO Intermediate
The main advantage of trading using opposite IShares Short and PIMCO Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Short position performs unexpectedly, PIMCO Intermediate 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 Intermediate will offset losses from the drop in PIMCO Intermediate's long position.| IShares Short vs. iShares Treasury Floating | IShares Short vs. iShares Short Term National | IShares Short vs. iShares Short Maturity | IShares Short vs. iShares Interest Rate |
| PIMCO Intermediate vs. iShares JP Morgan | PIMCO Intermediate vs. iShares iBoxx Investment | PIMCO Intermediate vs. SPDR Nuveen Bloomberg | PIMCO Intermediate vs. iShares MBS ETF |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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