Correlation Between PIMCO ETF and Avantis Core
Can any of the company-specific risk be diversified away by investing in both PIMCO ETF and Avantis Core 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 Avantis Core 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 Avantis Core Municipal, you can compare the effects of market volatilities on PIMCO ETF and Avantis Core 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 Avantis Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO ETF and Avantis Core.
Diversification Opportunities for PIMCO ETF and Avantis Core
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between PIMCO and Avantis is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO ETF Trust and Avantis Core Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Core Municipal 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 Avantis Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Core Municipal has no effect on the direction of PIMCO ETF i.e., PIMCO ETF and Avantis Core go up and down completely randomly.
Pair Corralation between PIMCO ETF and Avantis Core
Given the investment horizon of 90 days PIMCO ETF Trust is expected to generate 1.15 times more return on investment than Avantis Core. However, PIMCO ETF is 1.15 times more volatile than Avantis Core Municipal. It trades about 0.08 of its potential returns per unit of risk. Avantis Core Municipal is currently generating about 0.06 per unit of risk. If you would invest 4,089 in PIMCO ETF Trust on August 27, 2024 and sell it today you would earn a total of 466.00 from holding PIMCO ETF Trust or generate 11.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PIMCO ETF Trust vs. Avantis Core Municipal
Performance |
| Timeline |
| PIMCO ETF Trust |
| Avantis Core Municipal |
PIMCO ETF and Avantis Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIMCO ETF and Avantis Core
The main advantage of trading using opposite PIMCO ETF and Avantis Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO ETF position performs unexpectedly, Avantis Core 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 Avantis Core will offset losses from the drop in Avantis Core's long position.| PIMCO ETF vs. SSGA Active Trust | PIMCO ETF vs. SPDR MarketAxess Investment | PIMCO ETF vs. SSGA Active Trust |
| Avantis Core vs. Avantis Core Fixed | Avantis Core vs. American Century ETF | Avantis Core vs. American Century Diversified | Avantis Core vs. IQ MacKay Municipal |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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