Correlation Between FCF International and PIMCO RAFI
Can any of the company-specific risk be diversified away by investing in both FCF International and PIMCO RAFI 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 FCF International and PIMCO RAFI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FCF International Quality and PIMCO RAFI Dynamic, you can compare the effects of market volatilities on FCF International and PIMCO RAFI 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 FCF International with a short position of PIMCO RAFI. Check out your portfolio center. Please also check ongoing floating volatility patterns of FCF International and PIMCO RAFI.
Diversification Opportunities for FCF International and PIMCO RAFI
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FCF and PIMCO is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding FCF International Quality and PIMCO RAFI Dynamic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO RAFI Dynamic and FCF International 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 FCF International Quality are associated (or correlated) with PIMCO RAFI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO RAFI Dynamic has no effect on the direction of FCF International i.e., FCF International and PIMCO RAFI go up and down completely randomly.
Pair Corralation between FCF International and PIMCO RAFI
Given the investment horizon of 90 days FCF International Quality is expected to under-perform the PIMCO RAFI. In addition to that, FCF International is 1.11 times more volatile than PIMCO RAFI Dynamic. It trades about -0.19 of its total potential returns per unit of risk. PIMCO RAFI Dynamic is currently generating about -0.12 per unit of volatility. If you would invest 3,080 in PIMCO RAFI Dynamic on August 24, 2024 and sell it today you would lose (59.00) from holding PIMCO RAFI Dynamic or give up 1.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FCF International Quality vs. PIMCO RAFI Dynamic
Performance |
| Timeline |
| FCF International Quality |
| PIMCO RAFI Dynamic |
FCF International and PIMCO RAFI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FCF International and PIMCO RAFI
The main advantage of trading using opposite FCF International and PIMCO RAFI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FCF International position performs unexpectedly, PIMCO RAFI 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 RAFI will offset losses from the drop in PIMCO RAFI's long position.| FCF International vs. FCF Quality ETF | FCF International vs. PIMCO RAFI Dynamic | FCF International vs. ProShares SP 500 | FCF International vs. Affinity World Leaders |
| PIMCO RAFI vs. PIMCO RAFI Dynamic | PIMCO RAFI vs. PIMCO RAFI Dynamic | PIMCO RAFI vs. JPMorgan Diversified Return | PIMCO RAFI vs. JPMorgan Diversified Return |
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..
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |