Correlation Between IShares Aaa and PIMCO Investment
Can any of the company-specific risk be diversified away by investing in both IShares Aaa and PIMCO Investment 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 Aaa and PIMCO Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Aaa and PIMCO Investment Grade, you can compare the effects of market volatilities on IShares Aaa and PIMCO Investment 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 Aaa with a short position of PIMCO Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Aaa and PIMCO Investment.
Diversification Opportunities for IShares Aaa and PIMCO Investment
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and PIMCO is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares Aaa and PIMCO Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Investment Grade and IShares Aaa 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 Aaa are associated (or correlated) with PIMCO Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Investment Grade has no effect on the direction of IShares Aaa i.e., IShares Aaa and PIMCO Investment go up and down completely randomly.
Pair Corralation between IShares Aaa and PIMCO Investment
Given the investment horizon of 90 days IShares Aaa is expected to generate 1.71 times less return on investment than PIMCO Investment. In addition to that, IShares Aaa is 1.06 times more volatile than PIMCO Investment Grade. It trades about 0.02 of its total potential returns per unit of risk. PIMCO Investment Grade is currently generating about 0.04 per unit of volatility. If you would invest 9,033 in PIMCO Investment Grade on February 3, 2024 and sell it today you would earn a total of 403.00 from holding PIMCO Investment Grade or generate 4.46% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
iShares Aaa vs. PIMCO Investment Grade
Performance |
Timeline |
iShares Aaa |
PIMCO Investment Grade |
IShares Aaa and PIMCO Investment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares Aaa and PIMCO Investment
The main advantage of trading using opposite IShares Aaa and PIMCO Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Aaa position performs unexpectedly, PIMCO Investment 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 Investment will offset losses from the drop in PIMCO Investment's long position.IShares Aaa vs. iShares iBonds Dec | IShares Aaa vs. iShares 25 Year | IShares Aaa vs. HUMANA INC | IShares Aaa vs. Aquagold International |
PIMCO Investment vs. iShares iBonds Dec | PIMCO Investment vs. iShares 25 Year | PIMCO Investment vs. HUMANA INC | PIMCO Investment vs. Aquagold International |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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