Correlation Between PIMCO Preferred and First Trust
Can any of the company-specific risk be diversified away by investing in both PIMCO Preferred 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 Preferred 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 Preferred And and First Trust Preferred, you can compare the effects of market volatilities on PIMCO Preferred 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 Preferred with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Preferred and First Trust.
Diversification Opportunities for PIMCO Preferred and First Trust
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PIMCO and First is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Preferred And and First Trust Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Preferred and PIMCO Preferred 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 Preferred And 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 Preferred has no effect on the direction of PIMCO Preferred i.e., PIMCO Preferred and First Trust go up and down completely randomly.
Pair Corralation between PIMCO Preferred and First Trust
Given the investment horizon of 90 days PIMCO Preferred And is expected to generate 0.95 times more return on investment than First Trust. However, PIMCO Preferred And is 1.05 times less risky than First Trust. It trades about 0.39 of its potential returns per unit of risk. First Trust Preferred is currently generating about 0.29 per unit of risk. If you would invest 5,018 in PIMCO Preferred And on November 28, 2024 and sell it today you would earn a total of 66.00 from holding PIMCO Preferred And or generate 1.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PIMCO Preferred And vs. First Trust Preferred
Performance |
| Timeline |
| PIMCO Preferred And |
| First Trust Preferred |
PIMCO Preferred and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIMCO Preferred and First Trust
The main advantage of trading using opposite PIMCO Preferred and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO Preferred 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 Preferred vs. PIMCO Enhanced Low | PIMCO Preferred vs. Morgan Stanley Etf | PIMCO Preferred vs. Bondbloxx ETF Trust | PIMCO Preferred vs. First Trust Institutional |
| First Trust vs. Invesco Variable Rate | First Trust vs. VanEck Preferred Securities | First Trust vs. First Trust Tactical | First Trust vs. First Trust Senior |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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