Correlation Between PIMCO RAFI and FLQE
Can any of the company-specific risk be diversified away by investing in both PIMCO RAFI and FLQE 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 FLQE 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 FLQE, you can compare the effects of market volatilities on PIMCO RAFI and FLQE 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 FLQE. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO RAFI and FLQE.
Diversification Opportunities for PIMCO RAFI and FLQE
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PIMCO and FLQE is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO RAFI Dynamic and FLQE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLQE 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 FLQE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLQE has no effect on the direction of PIMCO RAFI i.e., PIMCO RAFI and FLQE go up and down completely randomly.
Pair Corralation between PIMCO RAFI and FLQE
If you would invest 2,444 in FLQE on January 26, 2024 and sell it today you would earn a total of 0.00 from holding FLQE or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
PIMCO RAFI Dynamic vs. FLQE
Performance |
| Timeline |
| PIMCO RAFI Dynamic |
| FLQE |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Excellent
PIMCO RAFI and FLQE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIMCO RAFI and FLQE
The main advantage of trading using opposite PIMCO RAFI and FLQE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO RAFI position performs unexpectedly, FLQE 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 FLQE will offset losses from the drop in FLQE's long position.The idea behind PIMCO RAFI Dynamic and FLQE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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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