Correlation Between PIMCO Managed and IShares Conservative

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

By analyzing existing cross correlation between PIMCO Managed Core and iShares Conservative Strategic, you can compare the effects of market volatilities on PIMCO Managed and IShares Conservative 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 Managed with a short position of IShares Conservative. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Managed and IShares Conservative.

Diversification Opportunities for PIMCO Managed and IShares Conservative

0.71

Correlation Coefficient

PIMCO Managed  IShares Conservative

Poor diversification

The 3 months correlation between PIMCO and IShares is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Managed Core and iShares Conservative Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Conservative and PIMCO Managed 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 Managed Core are associated (or correlated) with IShares Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Conservative has no effect on the direction of PIMCO Managed i.e., PIMCO Managed and IShares Conservative go up and down completely randomly.

Pair Corralation between PIMCO Managed and IShares Conservative

Assuming the 90 days trading horizon PIMCO Managed Core is expected to generate 1.5 times more return on investment than IShares Conservative. However, PIMCO Managed is 1.5 times more volatile than iShares Conservative Strategic. It trades about 0.08 of its potential returns per unit of risk. iShares Conservative Strategic is currently generating about 0.07 per unit of risk. If you would invest  1,771  in PIMCO Managed Core on April 20, 2025 and sell it today you would earn a total of  36.00  from holding PIMCO Managed Core or generate 2.03% return on investment over 90 days.

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

PIMCO Managed Core  vs.  iShares Conservative Strategic

PIMCO Managed Core

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Managed Core are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, PIMCO Managed is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

iShares Conservative

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Conservative Strategic are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, IShares Conservative is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with PIMCO Managed and IShares Conservative

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

The idea behind PIMCO Managed Core and iShares Conservative Strategic 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.