Correlation Between Dimensional ETF and PIMCO Short

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

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

Diversification Opportunities for Dimensional ETF and PIMCO Short

0.85

Correlation Coefficient

Dimensional ETF  PIMCO Short

Very poor diversification

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

Pair Corralation between Dimensional ETF and PIMCO Short

Given the investment horizon of 90 days Dimensional ETF Trust is expected to under-perform the PIMCO Short. In addition to that, Dimensional ETF is 1.66 times more volatile than PIMCO Short Term. It trades about -0.01 of its total potential returns per unit of risk. PIMCO Short Term is currently generating about 0.11 per unit of volatility. If you would invest  4,961  in PIMCO Short Term on December 30, 2024 and sell it today you would earn a total of  29.00  from holding PIMCO Short Term or generate 0.58% return on investment over 90 days.

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

Dimensional ETF Trust  vs.  PIMCO Short Term

Dimensional ETF Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dimensional ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Dimensional ETF is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

PIMCO Short Term

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Short Term are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, PIMCO Short is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Dimensional ETF and PIMCO Short

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

The idea behind Dimensional ETF Trust and PIMCO Short Term 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.