Correlation Between PIMCO RAFI and American Express
Can any of the company-specific risk be diversified away by investing in both PIMCO RAFI and American Express 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 American Express 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 American Express, you can compare the effects of market volatilities on PIMCO RAFI and American Express 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 American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO RAFI and American Express.
Diversification Opportunities for PIMCO RAFI and American Express
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between PIMCO and American is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO RAFI Dynamic and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express 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 American Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Express has no effect on the direction of PIMCO RAFI i.e., PIMCO RAFI and American Express go up and down completely randomly.
Pair Corralation between PIMCO RAFI and American Express
Given the investment horizon of 90 days PIMCO RAFI Dynamic is expected to generate 0.73 times more return on investment than American Express. However, PIMCO RAFI Dynamic is 1.36 times less risky than American Express. It trades about -0.14 of its potential returns per unit of risk. American Express is currently generating about -0.2 per unit of risk. If you would invest 1,943 in PIMCO RAFI Dynamic on January 20, 2024 and sell it today you would lose (45.00) from holding PIMCO RAFI Dynamic or give up 2.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
PIMCO RAFI Dynamic vs. American Express
Performance |
| Timeline |
| PIMCO RAFI Dynamic |
| American Express |
PIMCO RAFI and American Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIMCO RAFI and American Express
The main advantage of trading using opposite PIMCO RAFI and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO RAFI position performs unexpectedly, American Express 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 American Express will offset losses from the drop in American Express' long position.| PIMCO RAFI vs. PIMCO RAFI Dynamic | PIMCO RAFI vs. PIMCO RAFI Dynamic | PIMCO RAFI vs. JPMorgan Diversified Return | PIMCO RAFI vs. JPMorgan Diversified Return |
| American Express vs. Visa Class A | American Express vs. PayPal Holdings | American Express vs. Mastercard | American Express vs. Ally Financial |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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