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 Enhanced 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
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between First and PIMCO is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Enhanced 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 Enhanced 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 is expected to generate 1.52 times less return on investment than PIMCO Enhanced. But when comparing it to its historical volatility, First Trust Enhanced is 1.65 times less risky than PIMCO Enhanced. It trades about 0.51 of its potential returns per unit of risk. PIMCO Enhanced Short is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest 9,846 in PIMCO Enhanced Short on August 29, 2024 and sell it today you would earn a total of 50.00 from holding PIMCO Enhanced Short or generate 0.51% 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 Enhanced vs. PIMCO Enhanced Short
Performance |
| Timeline |
| First Trust Enhanced |
| 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 Low | First Trust vs. First Trust Senior | First Trust vs. First Trust TCW | First Trust vs. First Trust Tactical |
| PIMCO Enhanced vs. Rbb Fund | PIMCO Enhanced vs. US Treasury 12 | PIMCO Enhanced vs. Rbb Fund | PIMCO Enhanced vs. Rbb Fund |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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