Correlation Between SPDR Nuveen and PIMCO ETF

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

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

Diversification Opportunities for SPDR Nuveen and PIMCO ETF

0.87

Correlation Coefficient

SPDR Nuveen  PIMCO ETF

Very poor diversification

The 3 months correlation between SPDR and PIMCO is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Nuveen Bloomberg 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 SPDR Nuveen 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 SPDR Nuveen Bloomberg 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 SPDR Nuveen i.e., SPDR Nuveen and PIMCO ETF go up and down completely randomly.

Pair Corralation between SPDR Nuveen and PIMCO ETF

Considering the 90-day investment horizon SPDR Nuveen Bloomberg is expected to generate 0.37 times more return on investment than PIMCO ETF. However, SPDR Nuveen Bloomberg is 2.7 times less risky than PIMCO ETF. It trades about 0.14 of its potential returns per unit of risk. PIMCO ETF Trust is currently generating about 0.04 per unit of risk. If you would invest  4,725  in SPDR Nuveen Bloomberg on December 18, 2024 and sell it today you would earn a total of  44.50  from holding SPDR Nuveen Bloomberg or generate 0.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

SPDR Nuveen Bloomberg  vs.  PIMCO ETF Trust

SPDR Nuveen Bloomberg

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Nuveen Bloomberg are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical indicators, SPDR Nuveen is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

PIMCO ETF Trust

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO ETF Trust are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, PIMCO ETF is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with SPDR Nuveen and PIMCO ETF

The main advantage of trading using opposite SPDR Nuveen and PIMCO ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Nuveen 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 SPDR Nuveen Bloomberg 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.