Correlation Between PIMCO RAFI and Listed Funds
Can any of the company-specific risk be diversified away by investing in both PIMCO RAFI and Listed Funds 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 Listed Funds 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 Listed Funds Trust, you can compare the effects of market volatilities on PIMCO RAFI and Listed Funds 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 Listed Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO RAFI and Listed Funds.
Diversification Opportunities for PIMCO RAFI and Listed Funds
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PIMCO and Listed is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO RAFI Dynamic and Listed Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Listed Funds Trust 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 Listed Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Listed Funds Trust has no effect on the direction of PIMCO RAFI i.e., PIMCO RAFI and Listed Funds go up and down completely randomly.
Pair Corralation between PIMCO RAFI and Listed Funds
Given the investment horizon of 90 days PIMCO RAFI Dynamic is expected to under-perform the Listed Funds. In addition to that, PIMCO RAFI is 1.08 times more volatile than Listed Funds Trust. It trades about -0.14 of its total potential returns per unit of risk. Listed Funds Trust is currently generating about 0.2 per unit of volatility. If you would invest 3,213 in Listed Funds Trust on October 23, 2024 and sell it today you would earn a total of 80.90 from holding Listed Funds Trust or generate 2.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PIMCO RAFI Dynamic vs. Listed Funds Trust
Performance |
| Timeline |
| PIMCO RAFI Dynamic |
| Listed Funds Trust |
PIMCO RAFI and Listed Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIMCO RAFI and Listed Funds
The main advantage of trading using opposite PIMCO RAFI and Listed Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO RAFI position performs unexpectedly, Listed Funds 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 Listed Funds will offset losses from the drop in Listed Funds' 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 |
| Listed Funds vs. Pacer Global Cash | Listed Funds vs. SmartETFs Dividend Builder | Listed Funds vs. FT Cboe Vest | Listed Funds vs. Franklin International Low |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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