Correlation Between PIMCO RAFI and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both PIMCO RAFI and IShares MSCI 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 RAFI and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PIMCO RAFI Dynamic and iShares MSCI China, you can compare the effects of market volatilities on PIMCO RAFI and IShares MSCI 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 RAFI with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO RAFI and IShares MSCI.
Diversification Opportunities for PIMCO RAFI and IShares MSCI
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between PIMCO and IShares is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO RAFI Dynamic and iShares MSCI China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI China and PIMCO RAFI 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 RAFI Dynamic are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI China has no effect on the direction of PIMCO RAFI i.e., PIMCO RAFI and IShares MSCI go up and down completely randomly.
Pair Corralation between PIMCO RAFI and IShares MSCI
Given the investment horizon of 90 days PIMCO RAFI Dynamic is expected to generate 0.34 times more return on investment than IShares MSCI. However, PIMCO RAFI Dynamic is 2.91 times less risky than IShares MSCI. It trades about 0.04 of its potential returns per unit of risk. iShares MSCI China is currently generating about -0.1 per unit of risk. If you would invest 3,071 in PIMCO RAFI Dynamic on September 4, 2024 and sell it today you would earn a total of 20.00 from holding PIMCO RAFI Dynamic or generate 0.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PIMCO RAFI Dynamic vs. iShares MSCI China
Performance |
| Timeline |
| PIMCO RAFI Dynamic |
| iShares MSCI China |
PIMCO RAFI and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIMCO RAFI and IShares MSCI
The main advantage of trading using opposite PIMCO RAFI and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO RAFI position performs unexpectedly, IShares MSCI 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 IShares MSCI will offset losses from the drop in IShares MSCI's long position.| PIMCO RAFI vs. PIMCO RAFI Dynamic | PIMCO RAFI vs. PIMCO RAFI Dynamic | PIMCO RAFI vs. JPMorgan Diversified Return | PIMCO RAFI vs. JPMorgan Diversified Return |
| IShares MSCI vs. KraneShares CSI China | IShares MSCI vs. Invesco China Technology | IShares MSCI vs. iShares MSCI India | IShares MSCI vs. Xtrackers Harvest CSI |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |