Correlation Between FlexShares IBoxx and PIMCO 1
Can any of the company-specific risk be diversified away by investing in both FlexShares IBoxx and PIMCO 1 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 FlexShares IBoxx and PIMCO 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FlexShares iBoxx 3 Year and PIMCO 1 5 Year, you can compare the effects of market volatilities on FlexShares IBoxx and PIMCO 1 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 FlexShares IBoxx with a short position of PIMCO 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of FlexShares IBoxx and PIMCO 1.
Diversification Opportunities for FlexShares IBoxx and PIMCO 1
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FlexShares and PIMCO is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares iBoxx 3 Year and PIMCO 1 5 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO 1 5 and FlexShares IBoxx 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 FlexShares iBoxx 3 Year are associated (or correlated) with PIMCO 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO 1 5 has no effect on the direction of FlexShares IBoxx i.e., FlexShares IBoxx and PIMCO 1 go up and down completely randomly.
Pair Corralation between FlexShares IBoxx and PIMCO 1
Given the investment horizon of 90 days FlexShares iBoxx 3 Year is expected to under-perform the PIMCO 1. In addition to that, FlexShares IBoxx is 1.13 times more volatile than PIMCO 1 5 Year. It trades about -0.01 of its total potential returns per unit of risk. PIMCO 1 5 Year is currently generating about 0.01 per unit of volatility. If you would invest 5,267 in PIMCO 1 5 Year on November 1, 2024 and sell it today you would earn a total of 7.00 from holding PIMCO 1 5 Year or generate 0.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FlexShares iBoxx 3 Year vs. PIMCO 1 5 Year
Performance |
| Timeline |
| FlexShares iBoxx 3 |
| PIMCO 1 5 |
FlexShares IBoxx and PIMCO 1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FlexShares IBoxx and PIMCO 1
The main advantage of trading using opposite FlexShares IBoxx and PIMCO 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares IBoxx position performs unexpectedly, PIMCO 1 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 1 will offset losses from the drop in PIMCO 1's long position.| FlexShares IBoxx vs. FlexShares iBoxx 5 Year | FlexShares IBoxx vs. SPDR Bloomberg 1 10 | FlexShares IBoxx vs. PIMCO 1 5 Year | FlexShares IBoxx vs. PIMCO Broad TIPS |
| PIMCO 1 vs. PIMCO Broad TIPS | PIMCO 1 vs. PIMCO 15 Year | PIMCO 1 vs. SPDR FTSE International | PIMCO 1 vs. FlexShares iBoxx 3 Year |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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