Correlation Between IShares Conservative and PIMCO Low

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

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

Diversification Opportunities for IShares Conservative and PIMCO Low

0.91

Correlation Coefficient

IShares Conservative  PIMCO Low

Almost no diversification

The 3 months correlation between IShares and PIMCO is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding iShares Conservative Short and PIMCO Low Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Low Duration and IShares Conservative 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 iShares Conservative Short are associated (or correlated) with PIMCO Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Low Duration has no effect on the direction of IShares Conservative i.e., IShares Conservative and PIMCO Low go up and down completely randomly.

Pair Corralation between IShares Conservative and PIMCO Low

Assuming the 90 days trading horizon IShares Conservative is expected to generate 1.48 times less return on investment than PIMCO Low. But when comparing it to its historical volatility, iShares Conservative Short is 1.63 times less risky than PIMCO Low. It trades about 0.15 of its potential returns per unit of risk. PIMCO Low Duration is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,828  in PIMCO Low Duration on April 22, 2025 and sell it today you would earn a total of  40.00  from holding PIMCO Low Duration or generate 2.19% return on investment over 90 days.

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

iShares Conservative Short  vs.  PIMCO Low Duration

iShares Conservative

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Conservative Short are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy 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.

PIMCO Low Duration

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Low Duration are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, PIMCO Low is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IShares Conservative and PIMCO Low

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

The idea behind iShares Conservative Short and PIMCO Low Duration 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.