Correlation Between PIMCO 1 and IShares 1

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both PIMCO 1 and IShares 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 PIMCO 1 and IShares 1 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 1 3 Year, you can compare the effects of market volatilities on PIMCO 1 and IShares 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 PIMCO 1 with a short position of IShares 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO 1 and IShares 1.

Diversification Opportunities for PIMCO 1 and IShares 1

0.63
  Correlation Coefficient

Poor diversification

The 3 months correlation between PIMCO and IShares is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO 1 5 Year and iShares 1 3 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 1 3 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 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares 1 3 has no effect on the direction of PIMCO 1 i.e., PIMCO 1 and IShares 1 go up and down completely randomly.

Pair Corralation between PIMCO 1 and IShares 1

Given the investment horizon of 90 days PIMCO 1 5 Year is expected to generate 1.27 times more return on investment than IShares 1. However, PIMCO 1 is 1.27 times more volatile than iShares 1 3 Year. It trades about 0.04 of its potential returns per unit of risk. iShares 1 3 Year is currently generating about -0.02 per unit of risk. If you would invest  5,112  in PIMCO 1 5 Year on January 26, 2024 and sell it today you would earn a total of  18.00  from holding PIMCO 1 5 Year or generate 0.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

PIMCO 1 5 Year  vs.  iShares 1 3 Year

 Performance 
       Timeline  
PIMCO 1 5 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO 1 5 Year are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, PIMCO 1 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
iShares 1 3 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days iShares 1 3 Year has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, IShares 1 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

PIMCO 1 and IShares 1 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PIMCO 1 and IShares 1

The main advantage of trading using opposite PIMCO 1 and IShares 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO 1 position performs unexpectedly, IShares 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 IShares 1 will offset losses from the drop in IShares 1's long position.
The idea behind PIMCO 1 5 Year and iShares 1 3 Year pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

Other Complementary Tools

Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Equity Search
Search for actively traded equities including funds and ETFs from over 30 global markets
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
ETF Categories
List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments