Correlation Between VanEck CEF and PIMCO Short

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

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

Diversification Opportunities for VanEck CEF and PIMCO Short

0.79

Correlation Coefficient

VanEck CEF  PIMCO Short

Poor diversification

The 3 months correlation between VanEck and PIMCO is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding VanEck CEF Municipal and PIMCO Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Short Term and VanEck CEF 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 VanEck CEF Municipal are associated (or correlated) with PIMCO Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Short Term has no effect on the direction of VanEck CEF i.e., VanEck CEF and PIMCO Short go up and down completely randomly.

Pair Corralation between VanEck CEF and PIMCO Short

Given the investment horizon of 90 days VanEck CEF Municipal is expected to generate 4.98 times more return on investment than PIMCO Short. However, VanEck CEF is 4.98 times more volatile than PIMCO Short Term. It trades about 0.08 of its potential returns per unit of risk. PIMCO Short Term is currently generating about 0.23 per unit of risk. If you would invest  2,121  in VanEck CEF Municipal on December 19, 2024 and sell it today you would earn a total of  42.00  from holding VanEck CEF Municipal or generate 1.98% return on investment over 90 days.

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

VanEck CEF Municipal  vs.  PIMCO Short Term

VanEck CEF Municipal

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck CEF Municipal are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, VanEck CEF is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with VanEck CEF and PIMCO Short

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

The idea behind VanEck CEF Municipal and PIMCO Short Term 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.