Correlation Between PIMCO Intermediate and IShares Short

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Can any of the company-specific risk be diversified away by investing in both PIMCO Intermediate and IShares Short 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 Intermediate and IShares Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PIMCO Intermediate Municipal and iShares Short Maturity, you can compare the effects of market volatilities on PIMCO Intermediate and IShares Short 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 Intermediate with a short position of IShares Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Intermediate and IShares Short.

Diversification Opportunities for PIMCO Intermediate and IShares Short

-0.16
  Correlation Coefficient

Good diversification

The 3 months correlation between PIMCO and IShares is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Intermediate Municipal and iShares Short Maturity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Short Maturity and PIMCO Intermediate 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 Intermediate Municipal are associated (or correlated) with IShares Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Short Maturity has no effect on the direction of PIMCO Intermediate i.e., PIMCO Intermediate and IShares Short go up and down completely randomly.

Pair Corralation between PIMCO Intermediate and IShares Short

Given the investment horizon of 90 days PIMCO Intermediate Municipal is expected to generate 3.66 times more return on investment than IShares Short. However, PIMCO Intermediate is 3.66 times more volatile than iShares Short Maturity. It trades about 0.13 of its potential returns per unit of risk. iShares Short Maturity is currently generating about 0.29 per unit of risk. 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 Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

PIMCO Intermediate Municipal  vs.  iShares Short Maturity

 Performance 
       Timeline  
PIMCO Intermediate 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Intermediate Municipal are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, PIMCO Intermediate is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.
iShares Short Maturity 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in iShares Short Maturity are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, IShares Short is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

PIMCO Intermediate and IShares Short Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PIMCO Intermediate and IShares Short

The main advantage of trading using opposite PIMCO Intermediate and IShares Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO Intermediate position performs unexpectedly, IShares Short 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 IShares Short will offset losses from the drop in IShares Short's long position.
The idea behind PIMCO Intermediate Municipal and iShares Short Maturity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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