Correlation Between First Trust and PIMCO Intermediate
Can any of the company-specific risk be diversified away by investing in both First Trust and PIMCO Intermediate 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 Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Flexible and PIMCO Intermediate Municipal, you can compare the effects of market volatilities on First Trust and PIMCO Intermediate 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 Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and PIMCO Intermediate.
Diversification Opportunities for First Trust and PIMCO Intermediate
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and PIMCO is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Flexible and PIMCO Intermediate Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Intermediate 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 Flexible are associated (or correlated) with PIMCO Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Intermediate has no effect on the direction of First Trust i.e., First Trust and PIMCO Intermediate go up and down completely randomly.
Pair Corralation between First Trust and PIMCO Intermediate
Given the investment horizon of 90 days First Trust Flexible is expected to generate 3.59 times more return on investment than PIMCO Intermediate. However, First Trust is 3.59 times more volatile than PIMCO Intermediate Municipal. It trades about 0.06 of its potential returns per unit of risk. PIMCO Intermediate Municipal is currently generating about 0.13 per unit of risk. If you would invest 1,648 in First Trust Flexible on September 1, 2024 and sell it today you would earn a total of 95.00 from holding First Trust Flexible or generate 5.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
First Trust Flexible vs. PIMCO Intermediate Municipal
Performance |
| Timeline |
| First Trust Flexible |
| PIMCO Intermediate |
First Trust and PIMCO Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and PIMCO Intermediate
The main advantage of trading using opposite First Trust and PIMCO Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, PIMCO Intermediate 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 Intermediate will offset losses from the drop in PIMCO Intermediate's long position.| First Trust vs. VanEck Intermediate Muni | First Trust vs. VanEck Short Muni | First Trust vs. SPDR Nuveen Bloomberg | First Trust vs. Invesco New York |
| PIMCO Intermediate vs. iShares JP Morgan | PIMCO Intermediate vs. iShares iBoxx Investment | PIMCO Intermediate vs. SPDR Nuveen Bloomberg | PIMCO Intermediate vs. iShares MBS ETF |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |