Correlation Between WisdomTree 9060 and Pimco Stocksplus

Can any of the company-specific risk be diversified away by investing in both WisdomTree 9060 and Pimco Stocksplus 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 WisdomTree 9060 and Pimco Stocksplus into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WisdomTree 9060 Balanced and Pimco Stocksplus Long, you can compare the effects of market volatilities on WisdomTree 9060 and Pimco Stocksplus 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 WisdomTree 9060 with a short position of Pimco Stocksplus. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree 9060 and Pimco Stocksplus.

Diversification Opportunities for WisdomTree 9060 and Pimco Stocksplus

0.9

Correlation Coefficient

WisdomTree 9060  Pimco Stocksplus

Almost no diversification

The 3 months correlation between WisdomTree and Pimco is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree 9060 Balanced and Pimco Stocksplus Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Stocksplus Long and WisdomTree 9060 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 WisdomTree 9060 Balanced are associated (or correlated) with Pimco Stocksplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Stocksplus Long has no effect on the direction of WisdomTree 9060 i.e., WisdomTree 9060 and Pimco Stocksplus go up and down completely randomly.

Pair Corralation between WisdomTree 9060 and Pimco Stocksplus

Given the investment horizon of 90 days WisdomTree 9060 Balanced is expected to under-perform the Pimco Stocksplus. But the etf apears to be less risky and, when comparing its historical volatility, WisdomTree 9060 Balanced is 1.24 times less risky than Pimco Stocksplus. The etf trades about -0.06 of its potential returns per unit of risk. The Pimco Stocksplus Long is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,602  in Pimco Stocksplus Long on December 30, 2024 and sell it today you would lose (54.00) from holding Pimco Stocksplus Long or give up 3.37% of portfolio value over 90 days.

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

WisdomTree 9060 Balanced  vs.  Pimco Stocksplus Long

WisdomTree 9060 Balanced

Risk-Adjusted Performance

Very Weak

Over the last 90 days WisdomTree 9060 Balanced has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, WisdomTree 9060 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pimco Stocksplus Long

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pimco Stocksplus Long has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Pimco Stocksplus is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with WisdomTree 9060 and Pimco Stocksplus

The main advantage of trading using opposite WisdomTree 9060 and Pimco Stocksplus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree 9060 position performs unexpectedly, Pimco Stocksplus 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 Stocksplus will offset losses from the drop in Pimco Stocksplus' long position.

The idea behind WisdomTree 9060 Balanced and Pimco Stocksplus Long 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.