Correlation Between Virtus ETF and PIMCO ETF

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

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

Diversification Opportunities for Virtus ETF and PIMCO ETF

0.54

Correlation Coefficient

Virtus ETF  PIMCO ETF

Very weak diversification

The 3 months correlation between Virtus and PIMCO is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Virtus ETF Trust and PIMCO ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO ETF Trust and Virtus 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 Virtus ETF Trust are associated (or correlated) with PIMCO ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO ETF Trust has no effect on the direction of Virtus ETF i.e., Virtus ETF and PIMCO ETF go up and down completely randomly.

Pair Corralation between Virtus ETF and PIMCO ETF

Given the investment horizon of 90 days Virtus ETF Trust is expected to generate 0.79 times more return on investment than PIMCO ETF. However, Virtus ETF Trust is 1.27 times less risky than PIMCO ETF. It trades about 0.06 of its potential returns per unit of risk. PIMCO ETF Trust is currently generating about -0.02 per unit of risk. If you would invest  2,355  in Virtus ETF Trust on December 29, 2024 and sell it today you would earn a total of  8.00  from holding Virtus ETF Trust or generate 0.34% return on investment over 90 days.

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

Virtus ETF Trust  vs.  PIMCO ETF Trust

Virtus ETF Trust

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus ETF Trust are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward indicators, Virtus ETF is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

PIMCO ETF Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days PIMCO ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Virtus ETF and PIMCO ETF

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

The idea behind Virtus ETF Trust and PIMCO 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.