Correlation Between PIMCO ETF and VanEck ETF

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

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

Diversification Opportunities for PIMCO ETF and VanEck ETF

0.7

Correlation Coefficient

PIMCO ETF  VanEck ETF

Poor diversification

The 3 months correlation between PIMCO and VanEck is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO ETF Trust and VanEck ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck ETF Trust and PIMCO 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 PIMCO ETF Trust are associated (or correlated) with VanEck ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck ETF Trust has no effect on the direction of PIMCO ETF i.e., PIMCO ETF and VanEck ETF go up and down completely randomly.

Pair Corralation between PIMCO ETF and VanEck ETF

Given the investment horizon of 90 days PIMCO ETF Trust is expected to generate 1.64 times more return on investment than VanEck ETF. However, PIMCO ETF is 1.64 times more volatile than VanEck ETF Trust. It trades about 0.29 of its potential returns per unit of risk. VanEck ETF Trust is currently generating about 0.4 per unit of risk. If you would invest  4,165  in PIMCO ETF Trust on December 5, 2024 and sell it today you would earn a total of  872.00  from holding PIMCO ETF Trust or generate 20.94% return on investment over 90 days.

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

PIMCO ETF Trust  vs.  VanEck ETF Trust

PIMCO ETF Trust

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO ETF Trust are ranked lower than 1 (%) 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.

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 49 (%) 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.

Pair Trading with PIMCO ETF and VanEck ETF

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

The idea behind PIMCO ETF Trust and VanEck 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.