Correlation Between PIMCO Mortgage and IQ Hedge
Can any of the company-specific risk be diversified away by investing in both PIMCO Mortgage and IQ Hedge 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 Mortgage and IQ Hedge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PIMCO Mortgage Backed Securities and IQ Hedge Multi Strategy, you can compare the effects of market volatilities on PIMCO Mortgage and IQ Hedge 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 Mortgage with a short position of IQ Hedge. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Mortgage and IQ Hedge.
Diversification Opportunities for PIMCO Mortgage and IQ Hedge
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PIMCO and QAI is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Mortgage Backed Securiti and IQ Hedge Multi Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ Hedge Multi and PIMCO Mortgage 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 Mortgage Backed Securities are associated (or correlated) with IQ Hedge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ Hedge Multi has no effect on the direction of PIMCO Mortgage i.e., PIMCO Mortgage and IQ Hedge go up and down completely randomly.
Pair Corralation between PIMCO Mortgage and IQ Hedge
Given the investment horizon of 90 days PIMCO Mortgage is expected to generate 1.92 times less return on investment than IQ Hedge. But when comparing it to its historical volatility, PIMCO Mortgage Backed Securities is 1.59 times less risky than IQ Hedge. It trades about 0.06 of its potential returns per unit of risk. IQ Hedge Multi Strategy is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,156 in IQ Hedge Multi Strategy on May 30, 2025 and sell it today you would earn a total of 154.00 from holding IQ Hedge Multi Strategy or generate 4.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PIMCO Mortgage Backed Securiti vs. IQ Hedge Multi Strategy
Performance |
| Timeline |
| PIMCO Mortgage Backed |
| IQ Hedge Multi |
PIMCO Mortgage and IQ Hedge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIMCO Mortgage and IQ Hedge
The main advantage of trading using opposite PIMCO Mortgage and IQ Hedge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO Mortgage position performs unexpectedly, IQ Hedge 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 IQ Hedge will offset losses from the drop in IQ Hedge's long position.| PIMCO Mortgage vs. Columbia Diversified Fixed | PIMCO Mortgage vs. Doubleline Etf Trust | PIMCO Mortgage vs. Virtus Newfleet ABSMBS | PIMCO Mortgage vs. Vident Core Bond |
| IQ Hedge vs. First Trust LongShort | IQ Hedge vs. ProShares Hedge Replication | IQ Hedge vs. IQ Merger Arbitrage |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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