Correlation Between PIMCO Investment and First Trust
Can any of the company-specific risk be diversified away by investing in both PIMCO Investment and First Trust 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 Investment and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PIMCO Investment Grade and First Trust Exchange Traded, you can compare the effects of market volatilities on PIMCO Investment and First Trust 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 Investment with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Investment and First Trust.
Diversification Opportunities for PIMCO Investment and First Trust
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between PIMCO and First is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Investment Grade and First Trust Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Exchange and PIMCO Investment 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 Investment Grade are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Exchange has no effect on the direction of PIMCO Investment i.e., PIMCO Investment and First Trust go up and down completely randomly.
Pair Corralation between PIMCO Investment and First Trust
Given the investment horizon of 90 days PIMCO Investment Grade is expected to generate 0.9 times more return on investment than First Trust. However, PIMCO Investment Grade is 1.12 times less risky than First Trust. It trades about 0.2 of its potential returns per unit of risk. First Trust Exchange Traded is currently generating about 0.06 per unit of risk. If you would invest 9,550 in PIMCO Investment Grade on November 27, 2024 and sell it today you would earn a total of 115.00 from holding PIMCO Investment Grade or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PIMCO Investment Grade vs. First Trust Exchange Traded
Performance |
| Timeline |
| PIMCO Investment Grade |
| First Trust Exchange |
PIMCO Investment and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIMCO Investment and First Trust
The main advantage of trading using opposite PIMCO Investment and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO Investment position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| PIMCO Investment vs. PIMCO 0 5 Year | PIMCO Investment vs. iShares Aaa | PIMCO Investment vs. PIMCO Active Bond | PIMCO Investment vs. Invesco Fundamental High |
| First Trust vs. VanEck Vectors Moodys | First Trust vs. Valued Advisers Trust | First Trust vs. Xtrackers California Municipal | First Trust vs. Principal Exchange Traded Funds |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |