Correlation Between FlexShares Ready and PIMCO Enhanced

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

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

Diversification Opportunities for FlexShares Ready and PIMCO Enhanced

1.0

Correlation Coefficient

FlexShares Ready  PIMCO Enhanced

No risk reduction

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

Pair Corralation between FlexShares Ready and PIMCO Enhanced

Given the investment horizon of 90 days FlexShares Ready Access is expected to generate 1.19 times more return on investment than PIMCO Enhanced. However, FlexShares Ready is 1.19 times more volatile than PIMCO Enhanced Short. It trades about 0.75 of its potential returns per unit of risk. PIMCO Enhanced Short is currently generating about 0.84 per unit of risk. If you would invest  7,462  in FlexShares Ready Access on December 29, 2024 and sell it today you would earn a total of  91.00  from holding FlexShares Ready Access or generate 1.22% return on investment over 90 days.

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

FlexShares Ready Access  vs.  PIMCO Enhanced Short

FlexShares Ready Access

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in FlexShares Ready Access are ranked lower than 58 (%) 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 newest stock price confusion, may contribute to short-horizon losses for the traders.

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 65 (%) 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.

Pair Trading with FlexShares Ready and PIMCO Enhanced

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

The idea behind FlexShares Ready Access and PIMCO Enhanced Short 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.