Correlation Between IShares Short and PIMCO Short
Can any of the company-specific risk be diversified away by investing in both IShares Short and PIMCO 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 IShares Short and PIMCO Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Short Term National and PIMCO Short Term, you can compare the effects of market volatilities on IShares Short and PIMCO 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 IShares Short with a short position of PIMCO Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Short and PIMCO Short.
Diversification Opportunities for IShares Short and PIMCO Short
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and PIMCO is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding iShares Short Term National and PIMCO Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Short Term 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 Term National are associated (or correlated) with PIMCO Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Short Term has no effect on the direction of IShares Short i.e., IShares Short and PIMCO Short go up and down completely randomly.
Pair Corralation between IShares Short and PIMCO Short
Considering the 90-day investment horizon IShares Short is expected to generate 1.1 times less return on investment than PIMCO Short. But when comparing it to its historical volatility, iShares Short Term National is 1.38 times less risky than PIMCO Short. It trades about 0.09 of its potential returns per unit of risk. PIMCO Short Term is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,986 in PIMCO Short Term on August 24, 2024 and sell it today you would earn a total of 14.00 from holding PIMCO Short Term or generate 0.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Short Term National vs. PIMCO Short Term
Performance |
| Timeline |
| iShares Short Term |
| PIMCO Short Term |
IShares Short and PIMCO Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Short and PIMCO Short
The main advantage of trading using opposite IShares Short and PIMCO Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Short position performs unexpectedly, PIMCO 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 PIMCO Short will offset losses from the drop in PIMCO Short's long position.| IShares Short vs. iShares New York | IShares Short vs. SPDR Nuveen Bloomberg | IShares Short vs. iShares California Muni | IShares Short vs. iShares National Muni |
| PIMCO Short vs. PIMCO Intermediate Municipal | PIMCO Short vs. VanEck Short Muni | PIMCO Short vs. iShares Short Term National | PIMCO Short vs. SPDR Nuveen Bloomberg |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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