Correlation Between PIMCO RAFI and Impact Shares

Can any of the company-specific risk be diversified away by investing in both PIMCO RAFI and Impact Shares 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 Impact Shares 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 Impact Shares NAACP, you can compare the effects of market volatilities on PIMCO RAFI and Impact Shares 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 Impact Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO RAFI and Impact Shares.

Diversification Opportunities for PIMCO RAFI and Impact Shares

0.88

Correlation Coefficient

PIMCO RAFI  Impact Shares

Very poor diversification

The 3 months correlation between PIMCO and Impact is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO RAFI Dynamic and Impact Shares NAACP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impact Shares NAACP 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 Impact Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impact Shares NAACP has no effect on the direction of PIMCO RAFI i.e., PIMCO RAFI and Impact Shares go up and down completely randomly.

Pair Corralation between PIMCO RAFI and Impact Shares

Given the investment horizon of 90 days PIMCO RAFI Dynamic is expected to generate 0.83 times more return on investment than Impact Shares. However, PIMCO RAFI Dynamic is 1.21 times less risky than Impact Shares. It trades about 0.03 of its potential returns per unit of risk. Impact Shares NAACP is currently generating about -0.04 per unit of risk. If you would invest  4,933  in PIMCO RAFI Dynamic on December 19, 2024 and sell it today you would earn a total of  67.00  from holding PIMCO RAFI Dynamic or generate 1.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

PIMCO RAFI Dynamic  vs.  Impact Shares NAACP

PIMCO RAFI Dynamic

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO RAFI Dynamic are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, PIMCO RAFI is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Impact Shares NAACP

Risk-Adjusted Performance

Very Weak

Over the last 90 days Impact Shares NAACP has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Impact Shares is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with PIMCO RAFI and Impact Shares

The main advantage of trading using opposite PIMCO RAFI and Impact Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO RAFI position performs unexpectedly, Impact Shares 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 Impact Shares will offset losses from the drop in Impact Shares' long position.

The idea behind PIMCO RAFI Dynamic and Impact Shares NAACP 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.

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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.