Correlation Between First Trust and PIMCO Enhanced
Can any of the company-specific risk be diversified away by investing in both First Trust and PIMCO Enhanced 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 Enhanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Senior and PIMCO Enhanced Short, you can compare the effects of market volatilities on First Trust and PIMCO Enhanced 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 Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and PIMCO Enhanced.
Diversification Opportunities for First Trust and PIMCO Enhanced
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and PIMCO is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Senior and PIMCO Enhanced Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Enhanced Short 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 Senior are associated (or correlated) with PIMCO Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Enhanced Short has no effect on the direction of First Trust i.e., First Trust and PIMCO Enhanced go up and down completely randomly.
Pair Corralation between First Trust and PIMCO Enhanced
Given the investment horizon of 90 days First Trust Senior is expected to generate 4.82 times more return on investment than PIMCO Enhanced. However, First Trust is 4.82 times more volatile than PIMCO Enhanced Short. It trades about 0.25 of its potential returns per unit of risk. PIMCO Enhanced Short is currently generating about 0.84 per unit of risk. If you would invest 4,176 in First Trust Senior on August 29, 2024 and sell it today you would earn a total of 452.00 from holding First Trust Senior or generate 10.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Senior vs. PIMCO Enhanced Short
Performance |
| Timeline |
| First Trust Senior |
| PIMCO Enhanced Short |
First Trust and PIMCO Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and PIMCO Enhanced
The main advantage of trading using opposite First Trust and PIMCO Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, PIMCO Enhanced 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 Enhanced will offset losses from the drop in PIMCO Enhanced's long position.| First Trust vs. First Trust Tactical | First Trust vs. First Trust Low | First Trust vs. First Trust Enhanced | First Trust vs. First Trust Managed |
| PIMCO Enhanced vs. Valued Advisers Trust | PIMCO Enhanced vs. Columbia Diversified Fixed | PIMCO Enhanced vs. Principal Exchange Traded Funds | PIMCO Enhanced vs. Doubleline Etf Trust |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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