Correlation Between Pimco All and First American
Can any of the company-specific risk be diversified away by investing in both Pimco All and First American 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 All and First American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pimco All Asset and First American Funds, you can compare the effects of market volatilities on Pimco All and First American 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 All with a short position of First American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco All and First American.
Diversification Opportunities for Pimco All and First American
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pimco and First is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Pimco All Asset and First American Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First American Funds and Pimco All 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 All Asset are associated (or correlated) with First American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First American Funds has no effect on the direction of Pimco All i.e., Pimco All and First American go up and down completely randomly.
Pair Corralation between Pimco All and First American
Assuming the 90 days horizon Pimco All is expected to generate 58.4 times less return on investment than First American. But when comparing it to its historical volatility, Pimco All Asset is 36.75 times less risky than First American. It trades about 0.02 of its potential returns per unit of risk. First American Funds is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 311.00 in First American Funds on September 3, 2024 and sell it today you would lose (211.00) from holding First American Funds or give up 67.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pimco All Asset vs. First American Funds
Performance |
| Timeline |
| Pimco All Asset |
| First American Funds |
Pimco All and First American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pimco All and First American
The main advantage of trading using opposite Pimco All and First American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco All position performs unexpectedly, First American 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 American will offset losses from the drop in First American's long position.| Pimco All vs. First American Funds | Pimco All vs. Wt Mutual Fund | Pimco All vs. Prudential Government Money | Pimco All vs. Lord Abbett Emerging |
| First American vs. Vanguard Total Stock | First American vs. Vanguard 500 Index | First American vs. Vanguard Total Stock | First American vs. Vanguard Total Stock |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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