Correlation Between PIMCO 1 and IShares New
Can any of the company-specific risk be diversified away by investing in both PIMCO 1 and IShares New 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 1 and IShares New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PIMCO 1 5 Year and iShares New York, you can compare the effects of market volatilities on PIMCO 1 and IShares New 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 1 with a short position of IShares New. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO 1 and IShares New.
Diversification Opportunities for PIMCO 1 and IShares New
-0.09 | Correlation Coefficient |
Good 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 1 5 Year and iShares New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares New York and PIMCO 1 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 1 5 Year are associated (or correlated) with IShares New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares New York has no effect on the direction of PIMCO 1 i.e., PIMCO 1 and IShares New go up and down completely randomly.
Pair Corralation between PIMCO 1 and IShares New
Given the investment horizon of 90 days PIMCO 1 5 Year is expected to generate 0.81 times more return on investment than IShares New. However, PIMCO 1 5 Year is 1.24 times less risky than IShares New. It trades about -0.03 of its potential returns per unit of risk. iShares New York is currently generating about -0.23 per unit of risk. If you would invest 5,135 in PIMCO 1 5 Year on January 26, 2024 and sell it today you would lose (5.00) from holding PIMCO 1 5 Year or give up 0.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PIMCO 1 5 Year vs. iShares New York
Performance |
| Timeline |
| PIMCO 1 5 |
| iShares New York |
PIMCO 1 and IShares New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIMCO 1 and IShares New
The main advantage of trading using opposite PIMCO 1 and IShares New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO 1 position performs unexpectedly, IShares New 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 New will offset losses from the drop in IShares New's long position.| PIMCO 1 vs. iShares iBoxx Investment | PIMCO 1 vs. iShares 1 3 Year | PIMCO 1 vs. iShares 7 10 Year | PIMCO 1 vs. iShares Core Aggregate |
| IShares New vs. Invesco California AMT Free | IShares New vs. Invesco VRDO Tax Free | IShares New vs. Invesco National AMT Free |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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