Correlation Between PIMCO 1 and IShares Inflation
Can any of the company-specific risk be diversified away by investing in both PIMCO 1 and IShares Inflation 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 1 and IShares Inflation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PIMCO 1 5 Year and iShares Inflation Hedged, you can compare the effects of market volatilities on PIMCO 1 and IShares Inflation 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 1 with a short position of IShares Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO 1 and IShares Inflation.
Diversification Opportunities for PIMCO 1 and IShares Inflation
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PIMCO and IShares is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO 1 5 Year and iShares Inflation Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Inflation Hedged and PIMCO 1 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 1 5 Year are associated (or correlated) with IShares Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Inflation Hedged has no effect on the direction of PIMCO 1 i.e., PIMCO 1 and IShares Inflation go up and down completely randomly.
Pair Corralation between PIMCO 1 and IShares Inflation
Given the investment horizon of 90 days PIMCO 1 5 Year is expected to generate 0.32 times more return on investment than IShares Inflation. However, PIMCO 1 5 Year is 3.14 times less risky than IShares Inflation. It trades about -0.04 of its potential returns per unit of risk. iShares Inflation Hedged is currently generating about -0.14 per unit of risk. If you would invest 5,138 in PIMCO 1 5 Year on January 25, 2024 and sell it today you would lose (7.00) from holding PIMCO 1 5 Year or give up 0.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PIMCO 1 5 Year vs. iShares Inflation Hedged
Performance |
| Timeline |
| PIMCO 1 5 |
| iShares Inflation Hedged |
PIMCO 1 and IShares Inflation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIMCO 1 and IShares Inflation
The main advantage of trading using opposite PIMCO 1 and IShares Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO 1 position performs unexpectedly, IShares Inflation 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 IShares Inflation will offset losses from the drop in IShares Inflation's long position.| PIMCO 1 vs. HUMANA INC | PIMCO 1 vs. Aquagold International | PIMCO 1 vs. Barloworld Ltd ADR | PIMCO 1 vs. Morningstar Unconstrained Allocation |
| IShares Inflation vs. iShares iBonds 2026 | IShares Inflation vs. iShares iBonds Dec | IShares Inflation vs. iShares 25 Year |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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