Correlation Between PIMCO 1 and FLM
Can any of the company-specific risk be diversified away by investing in both PIMCO 1 and FLM 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 1 and FLM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PIMCO 1 5 Year and FLM, you can compare the effects of market volatilities on PIMCO 1 and FLM 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 1 with a short position of FLM. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO 1 and FLM.
Diversification Opportunities for PIMCO 1 and FLM
Very weak diversification
The 3 months correlation between PIMCO and FLM is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO 1 5 Year and FLM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLM and PIMCO 1 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 1 5 Year are associated (or correlated) with FLM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLM has no effect on the direction of PIMCO 1 i.e., PIMCO 1 and FLM go up and down completely randomly.
Pair Corralation between PIMCO 1 and FLM
Given the investment horizon of 90 days PIMCO 1 is expected to generate 6.52 times less return on investment than FLM. But when comparing it to its historical volatility, PIMCO 1 5 Year is 4.97 times less risky than FLM. It trades about 0.06 of its potential returns per unit of risk. FLM is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,426 in FLM on January 19, 2024 and sell it today you would earn a total of 1,546 from holding FLM or generate 34.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 86.01% |
| Values | Daily Returns |
PIMCO 1 5 Year vs. FLM
Performance |
| Timeline |
| PIMCO 1 5 |
| FLM |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
PIMCO 1 and FLM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIMCO 1 and FLM
The main advantage of trading using opposite PIMCO 1 and FLM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO 1 position performs unexpectedly, FLM 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 FLM will offset losses from the drop in FLM's long position.| PIMCO 1 vs. iShares iBoxx Investment | PIMCO 1 vs. iShares 1 3 Year | PIMCO 1 vs. iShares 7 10 Year | PIMCO 1 vs. iShares Core Aggregate |
| FLM vs. Invesco DWA Utilities | FLM vs. Invesco Dynamic Food | FLM vs. HUMANA INC | FLM vs. Aquagold International |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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