Correlation Between PIMCO Short and Leverage Shares
Can any of the company-specific risk be diversified away by investing in both PIMCO Short and Leverage Shares 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 Leverage Shares 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 Leverage Shares 5x, you can compare the effects of market volatilities on PIMCO Short and Leverage Shares 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 Leverage Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Short and Leverage Shares.
Diversification Opportunities for PIMCO Short and Leverage Shares
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PIMCO and Leverage is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Short Term High and Leverage Shares 5x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leverage Shares 5x 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 Leverage Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leverage Shares 5x has no effect on the direction of PIMCO Short i.e., PIMCO Short and Leverage Shares go up and down completely randomly.
Pair Corralation between PIMCO Short and Leverage Shares
Assuming the 90 days trading horizon PIMCO Short is expected to generate 12.28 times less return on investment than Leverage Shares. But when comparing it to its historical volatility, PIMCO Short Term High is 21.75 times less risky than Leverage Shares. It trades about 0.24 of its potential returns per unit of risk. Leverage Shares 5x is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 186.00 in Leverage Shares 5x on September 13, 2024 and sell it today you would earn a total of 21.00 from holding Leverage Shares 5x or generate 11.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PIMCO Short Term High vs. Leverage Shares 5x
Performance |
| Timeline |
| PIMCO Short Term |
| Leverage Shares 5x |
PIMCO Short and Leverage Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIMCO Short and Leverage Shares
The main advantage of trading using opposite PIMCO Short and Leverage Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO Short position performs unexpectedly, Leverage Shares 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 Leverage Shares will offset losses from the drop in Leverage Shares' long position.| PIMCO Short vs. PIMCO Dollar Short | PIMCO Short vs. PIMCO Low Duration | PIMCO Short vs. PIMCO ETFs plc | PIMCO Short vs. PIMCO Short Term High |
| Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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