Correlation Between WisdomTree Floating and PIMCO ETF

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

By analyzing existing cross correlation between WisdomTree Floating Rate and PIMCO ETF Trust, you can compare the effects of market volatilities on WisdomTree Floating and PIMCO ETF 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 WisdomTree Floating with a short position of PIMCO ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Floating and PIMCO ETF.

Diversification Opportunities for WisdomTree Floating and PIMCO ETF

0.99

Correlation Coefficient

WisdomTree Floating  PIMCO ETF

No risk reduction

The 3 months correlation between WisdomTree and PIMCO is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Floating Rate and PIMCO ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO ETF Trust and WisdomTree Floating 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 WisdomTree Floating Rate are associated (or correlated) with PIMCO ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO ETF Trust has no effect on the direction of WisdomTree Floating i.e., WisdomTree Floating and PIMCO ETF go up and down completely randomly.

Pair Corralation between WisdomTree Floating and PIMCO ETF

Given the investment horizon of 90 days WisdomTree Floating Rate is expected to generate 1.18 times more return on investment than PIMCO ETF. However, WisdomTree Floating is 1.18 times more volatile than PIMCO ETF Trust. It trades about 0.93 of its potential returns per unit of risk. PIMCO ETF Trust is currently generating about 1.06 per unit of risk. If you would invest  4,968  in WisdomTree Floating Rate on September 2, 2024 and sell it today you would earn a total of  62.00  from holding WisdomTree Floating Rate or generate 1.25% return on investment over 90 days.

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

WisdomTree Floating Rate  vs.  PIMCO ETF Trust

WisdomTree Floating Rate

Risk-Adjusted Performance

73 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Floating Rate are ranked lower than 73 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, WisdomTree Floating is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

PIMCO ETF Trust

Risk-Adjusted Performance

83 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO ETF Trust are ranked lower than 83 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, PIMCO ETF is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with WisdomTree Floating and PIMCO ETF

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

The idea behind WisdomTree Floating Rate and PIMCO ETF Trust 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.