Correlation Between VanEck ETF and PIMCO ETF

Can any of the company-specific risk be diversified away by investing in both VanEck ETF and PIMCO ETF 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 VanEck ETF and PIMCO ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VanEck ETF Trust and PIMCO ETF Trust, you can compare the effects of market volatilities on VanEck ETF and PIMCO ETF 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 VanEck ETF with a short position of PIMCO ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck ETF and PIMCO ETF.

Diversification Opportunities for VanEck ETF and PIMCO ETF

0.85

Correlation Coefficient

VanEck ETF  PIMCO ETF

Very poor diversification

The 3 months correlation between VanEck and PIMCO is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding VanEck ETF Trust and PIMCO ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO ETF Trust and VanEck ETF 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 VanEck ETF Trust are associated (or correlated) with PIMCO ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO ETF Trust has no effect on the direction of VanEck ETF i.e., VanEck ETF and PIMCO ETF go up and down completely randomly.

Pair Corralation between VanEck ETF and PIMCO ETF

Given the investment horizon of 90 days VanEck ETF Trust is expected to generate 0.41 times more return on investment than PIMCO ETF. However, VanEck ETF Trust is 2.42 times less risky than PIMCO ETF. It trades about 0.57 of its potential returns per unit of risk. PIMCO ETF Trust is currently generating about 0.07 per unit of risk. If you would invest  5,225  in VanEck ETF Trust on November 28, 2024 and sell it today you would earn a total of  83.00  from holding VanEck ETF Trust or generate 1.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

VanEck ETF Trust  vs.  PIMCO ETF Trust

VanEck ETF Trust

Risk-Adjusted Performance

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck ETF Trust are ranked lower than 44 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, VanEck ETF is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

PIMCO ETF Trust

Risk-Adjusted Performance

Modest

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

Pair Trading with VanEck ETF and PIMCO ETF

The main advantage of trading using opposite VanEck ETF and PIMCO ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck ETF position performs unexpectedly, PIMCO ETF 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 ETF will offset losses from the drop in PIMCO ETF's long position.

The idea behind VanEck ETF Trust and PIMCO ETF Trust 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.