Correlation Between PIMCO Short and PIMCO ETF

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

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

Diversification Opportunities for PIMCO Short and PIMCO ETF

0.83

Correlation Coefficient

PIMCO Short  PIMCO ETF

Very poor diversification

The 3 months correlation between PIMCO and PIMCO is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Short Term 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 PIMCO Short 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 Short Term 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 PIMCO Short i.e., PIMCO Short and PIMCO ETF go up and down completely randomly.

Pair Corralation between PIMCO Short and PIMCO ETF

Given the investment horizon of 90 days PIMCO Short is expected to generate 1.03 times less return on investment than PIMCO ETF. But when comparing it to its historical volatility, PIMCO Short Term is 3.31 times less risky than PIMCO ETF. It trades about 0.23 of its potential returns per unit of risk. PIMCO ETF Trust is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4,456  in PIMCO ETF Trust on December 19, 2024 and sell it today you would earn a total of  54.00  from holding PIMCO ETF Trust or generate 1.21% return on investment over 90 days.

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

PIMCO Short Term  vs.  PIMCO ETF Trust

PIMCO Short Term

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Short Term are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, PIMCO Short is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

PIMCO ETF Trust

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO ETF Trust are ranked lower than 5 (%) 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 PIMCO Short and PIMCO ETF

The main advantage of trading using opposite PIMCO Short and PIMCO ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO Short 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 PIMCO Short Term 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.