Correlation Between PIMCO Enhanced and IShares Floating

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

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

Diversification Opportunities for PIMCO Enhanced and IShares Floating

1.0

Correlation Coefficient

PIMCO Enhanced  IShares Floating

No risk reduction

The 3 months correlation between PIMCO and IShares is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Enhanced Short and iShares Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Floating Rate and PIMCO Enhanced 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 Enhanced Short are associated (or correlated) with IShares Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Floating Rate has no effect on the direction of PIMCO Enhanced i.e., PIMCO Enhanced and IShares Floating go up and down completely randomly.

Pair Corralation between PIMCO Enhanced and IShares Floating

Given the investment horizon of 90 days PIMCO Enhanced is expected to generate 1.04 times less return on investment than IShares Floating. But when comparing it to its historical volatility, PIMCO Enhanced Short is 3.88 times less risky than IShares Floating. It trades about 0.73 of its potential returns per unit of risk. iShares Floating Rate is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  4,539  in iShares Floating Rate on November 29, 2024 and sell it today you would earn a total of  567.00  from holding iShares Floating Rate or generate 12.49% return on investment over 90 days.

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

PIMCO Enhanced Short  vs.  iShares Floating Rate

PIMCO Enhanced Short

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Enhanced Short are ranked lower than 74 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, PIMCO Enhanced is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

iShares Floating Rate

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Floating Rate are ranked lower than 62 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, IShares Floating 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 PIMCO Enhanced and IShares Floating

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

The idea behind PIMCO Enhanced Short and iShares Floating Rate 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.