Correlation Between PIMCO Intermediate and First Trust
Can any of the company-specific risk be diversified away by investing in both PIMCO Intermediate and First Trust 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 Intermediate and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PIMCO Intermediate Municipal and First Trust Flexible, you can compare the effects of market volatilities on PIMCO Intermediate and First Trust 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 Intermediate with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Intermediate and First Trust.
Diversification Opportunities for PIMCO Intermediate and First Trust
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PIMCO and First is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Intermediate Municipal and First Trust Flexible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Flexible and PIMCO Intermediate 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 Intermediate Municipal are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Flexible has no effect on the direction of PIMCO Intermediate i.e., PIMCO Intermediate and First Trust go up and down completely randomly.
Pair Corralation between PIMCO Intermediate and First Trust
Given the investment horizon of 90 days PIMCO Intermediate is expected to generate 1.75 times less return on investment than First Trust. But when comparing it to its historical volatility, PIMCO Intermediate Municipal is 3.59 times less risky than First Trust. It trades about 0.13 of its potential returns per unit of risk. First Trust Flexible is currently generating about 0.06 of returns per unit of risk over similar time horizon. 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 |
PIMCO Intermediate Municipal vs. First Trust Flexible
Performance |
| Timeline |
| PIMCO Intermediate |
| First Trust Flexible |
PIMCO Intermediate and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIMCO Intermediate and First Trust
The main advantage of trading using opposite PIMCO Intermediate and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO Intermediate position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| PIMCO Intermediate vs. iShares JP Morgan | PIMCO Intermediate vs. iShares iBoxx Investment | PIMCO Intermediate vs. SPDR Nuveen Bloomberg | PIMCO Intermediate vs. iShares MBS ETF |
| First Trust vs. VanEck Intermediate Muni | First Trust vs. VanEck Short Muni | First Trust vs. SPDR Nuveen Bloomberg | First Trust vs. Invesco New York |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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