Correlation Between PIMCO Short and IShares Core
Can any of the company-specific risk be diversified away by investing in both PIMCO Short and IShares 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 Short and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PIMCO Short Term High and iShares Core SP, you can compare the effects of market volatilities on PIMCO Short and IShares 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 Short with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Short and IShares Core.
Diversification Opportunities for PIMCO Short and IShares Core
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between PIMCO and IShares is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Short Term High and iShares Core SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core SP and PIMCO 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 PIMCO Short Term High are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core SP has no effect on the direction of PIMCO Short i.e., PIMCO Short and IShares Core go up and down completely randomly.
Pair Corralation between PIMCO Short and IShares Core
Assuming the 90 days trading horizon PIMCO Short is expected to generate 4.11 times less return on investment than IShares Core. In addition to that, PIMCO Short is 1.8 times more volatile than iShares Core SP. It trades about 0.02 of its total potential returns per unit of risk. iShares Core SP is currently generating about 0.14 per unit of volatility. If you would invest 55,550 in iShares Core SP on September 1, 2024 and sell it today you would earn a total of 8,410 from holding iShares Core SP or generate 15.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
PIMCO Short Term High vs. iShares Core SP
Performance |
| Timeline |
| PIMCO Short Term |
| iShares Core SP |
PIMCO Short and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIMCO Short and IShares Core
The main advantage of trading using opposite PIMCO Short and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO Short position performs unexpectedly, IShares 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 IShares Core will offset losses from the drop in IShares Core's long position.The idea behind PIMCO Short Term High and iShares Core SP 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.| IShares Core vs. iShares Corp Bond | IShares Core vs. iShares Emerging Asia | IShares Core vs. iShares MSCI Global | IShares Core vs. iShares VII PLC |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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