Correlation Between First Trust and PIMCO Short
Can any of the company-specific risk be diversified away by investing in both First Trust and PIMCO Short 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 First Trust and PIMCO Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Short and PIMCO Short Term, you can compare the effects of market volatilities on First Trust and PIMCO Short 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 First Trust with a short position of PIMCO Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and PIMCO Short.
Diversification Opportunities for First Trust and PIMCO Short
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and PIMCO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Short and PIMCO Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Short Term and First Trust 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 First Trust Short are associated (or correlated) with PIMCO Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Short Term has no effect on the direction of First Trust i.e., First Trust and PIMCO Short go up and down completely randomly.
Pair Corralation between First Trust and PIMCO Short
Given the investment horizon of 90 days First Trust is expected to generate 3.53 times less return on investment than PIMCO Short. But when comparing it to its historical volatility, First Trust Short is 1.24 times less risky than PIMCO Short. It trades about 0.03 of its potential returns per unit of risk. PIMCO Short Term is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4,992 in PIMCO Short Term on August 27, 2024 and sell it today you would earn a total of 18.00 from holding PIMCO Short Term or generate 0.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Short vs. PIMCO Short Term
Performance |
| Timeline |
| First Trust Short |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| PIMCO Short Term |
First Trust and PIMCO Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and PIMCO Short
The main advantage of trading using opposite First Trust and PIMCO Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, PIMCO Short 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 Short will offset losses from the drop in PIMCO Short's long position.| First Trust vs. First Trust Ultra | First Trust vs. First Trust Managed | First Trust vs. First Trust Institutional | First Trust vs. JPMorgan Ultra Short Municipal |
| PIMCO Short vs. PIMCO Intermediate Municipal | PIMCO Short vs. VanEck Short Muni | PIMCO Short vs. iShares Short Term National | PIMCO Short vs. SPDR Nuveen Bloomberg |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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