Correlation Between Xtrackers Switzerland and PIMCO Euro

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

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

Diversification Opportunities for Xtrackers Switzerland and PIMCO Euro

0.64

Correlation Coefficient

Xtrackers Switzerland  PIMCO Euro

Poor diversification

The 3 months correlation between Xtrackers and PIMCO is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers Switzerland UCITS and PIMCO Euro Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Euro Short and Xtrackers Switzerland 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 Xtrackers Switzerland UCITS are associated (or correlated) with PIMCO Euro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Euro Short has no effect on the direction of Xtrackers Switzerland i.e., Xtrackers Switzerland and PIMCO Euro go up and down completely randomly.

Pair Corralation between Xtrackers Switzerland and PIMCO Euro

Assuming the 90 days trading horizon Xtrackers Switzerland UCITS is expected to generate 6.06 times more return on investment than PIMCO Euro. However, Xtrackers Switzerland is 6.06 times more volatile than PIMCO Euro Short Term. It trades about 0.23 of its potential returns per unit of risk. PIMCO Euro Short Term is currently generating about 0.17 per unit of risk. If you would invest  11,852  in Xtrackers Switzerland UCITS on December 31, 2024 and sell it today you would earn a total of  1,318  from holding Xtrackers Switzerland UCITS or generate 11.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Xtrackers Switzerland UCITS  vs.  PIMCO Euro Short Term

Xtrackers Switzerland

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers Switzerland UCITS are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Xtrackers Switzerland may actually be approaching a critical reversion point that can send shares even higher in May 2025.

PIMCO Euro Short

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Euro Short Term are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, PIMCO Euro is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Xtrackers Switzerland and PIMCO Euro

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

The idea behind Xtrackers Switzerland UCITS and PIMCO Euro 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.