Correlation Between PIMCO Enhanced and FlexShares Ready

Can any of the company-specific risk be diversified away by investing in both PIMCO Enhanced and FlexShares Ready 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 FlexShares Ready 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 FlexShares Ready Access, you can compare the effects of market volatilities on PIMCO Enhanced and FlexShares Ready 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 FlexShares Ready. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Enhanced and FlexShares Ready.

Diversification Opportunities for PIMCO Enhanced and FlexShares Ready

0.99

Correlation Coefficient

PIMCO Enhanced  FlexShares Ready

No risk reduction

The 3 months correlation between PIMCO and FlexShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Enhanced Short and FlexShares Ready Access in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares Ready Access 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 FlexShares Ready. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares Ready Access has no effect on the direction of PIMCO Enhanced i.e., PIMCO Enhanced and FlexShares Ready go up and down completely randomly.

Pair Corralation between PIMCO Enhanced and FlexShares Ready

Given the investment horizon of 90 days PIMCO Enhanced Short is expected to generate 0.78 times more return on investment than FlexShares Ready. However, PIMCO Enhanced Short is 1.29 times less risky than FlexShares Ready. It trades about 0.99 of its potential returns per unit of risk. FlexShares Ready Access is currently generating about 0.63 per unit of risk. If you would invest  9,911  in PIMCO Enhanced Short on September 13, 2024 and sell it today you would earn a total of  135.00  from holding PIMCO Enhanced Short or generate 1.36% 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.  FlexShares Ready Access

PIMCO Enhanced Short

Risk-Adjusted Performance

78 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Enhanced Short are ranked lower than 78 (%) 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 recent stock price uproar, may contribute to short-horizon losses for the private investors.

FlexShares Ready Access

Risk-Adjusted Performance

49 of 100

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in FlexShares Ready Access are ranked lower than 49 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, FlexShares Ready is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with PIMCO Enhanced and FlexShares Ready

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

The idea behind PIMCO Enhanced Short and FlexShares Ready Access 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.