Correlation Between PIMCO RAFI and VanEck LongFlat
Can any of the company-specific risk be diversified away by investing in both PIMCO RAFI and VanEck LongFlat 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 VanEck LongFlat 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 VanEck LongFlat Trend, you can compare the effects of market volatilities on PIMCO RAFI and VanEck LongFlat 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 VanEck LongFlat. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO RAFI and VanEck LongFlat.
Diversification Opportunities for PIMCO RAFI and VanEck LongFlat
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between PIMCO and VanEck is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO RAFI Dynamic and VanEck LongFlat Trend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck LongFlat Trend 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 VanEck LongFlat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck LongFlat Trend has no effect on the direction of PIMCO RAFI i.e., PIMCO RAFI and VanEck LongFlat go up and down completely randomly.
Pair Corralation between PIMCO RAFI and VanEck LongFlat
Given the investment horizon of 90 days PIMCO RAFI is expected to generate 1.22 times less return on investment than VanEck LongFlat. In addition to that, PIMCO RAFI is 1.01 times more volatile than VanEck LongFlat Trend. It trades about 0.09 of its total potential returns per unit of risk. VanEck LongFlat Trend is currently generating about 0.11 per unit of volatility. If you would invest 3,429 in VanEck LongFlat Trend on September 3, 2024 and sell it today you would earn a total of 1,684 from holding VanEck LongFlat Trend or generate 49.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PIMCO RAFI Dynamic vs. VanEck LongFlat Trend
Performance |
| Timeline |
| PIMCO RAFI Dynamic |
| VanEck LongFlat Trend |
PIMCO RAFI and VanEck LongFlat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIMCO RAFI and VanEck LongFlat
The main advantage of trading using opposite PIMCO RAFI and VanEck LongFlat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO RAFI position performs unexpectedly, VanEck LongFlat 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 VanEck LongFlat will offset losses from the drop in VanEck LongFlat's long position.| PIMCO RAFI vs. Global X Funds | PIMCO RAFI vs. Dell Technologies | PIMCO RAFI vs. Juniper Networks | PIMCO RAFI vs. HUMANA INC |
| VanEck LongFlat vs. VanEck Morningstar International | VanEck LongFlat vs. PIMCO RAFI Dynamic | VanEck LongFlat vs. PIMCO RAFI Dynamic | VanEck LongFlat vs. John Hancock Multifactor |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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