Correlation Between PIMCO Monthly and Fidelity ClearPath

Can any of the company-specific risk be diversified away by investing in both PIMCO Monthly and Fidelity ClearPath 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 Monthly and Fidelity ClearPath into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PIMCO Monthly Income and Fidelity ClearPath 2045, you can compare the effects of market volatilities on PIMCO Monthly and Fidelity ClearPath 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 Monthly with a short position of Fidelity ClearPath. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Monthly and Fidelity ClearPath.

Diversification Opportunities for PIMCO Monthly and Fidelity ClearPath

0.9

Correlation Coefficient

PIMCO Monthly  Fidelity ClearPath

Almost no diversification

The 3 months correlation between PIMCO and Fidelity is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Monthly Income and Fidelity ClearPath 2045 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity ClearPath 2045 and PIMCO Monthly 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 Monthly Income are associated (or correlated) with Fidelity ClearPath. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity ClearPath 2045 has no effect on the direction of PIMCO Monthly i.e., PIMCO Monthly and Fidelity ClearPath go up and down completely randomly.

Pair Corralation between PIMCO Monthly and Fidelity ClearPath

Assuming the 90 days trading horizon PIMCO Monthly Income is expected to generate 0.26 times more return on investment than Fidelity ClearPath. However, PIMCO Monthly Income is 3.9 times less risky than Fidelity ClearPath. It trades about -0.06 of its potential returns per unit of risk. Fidelity ClearPath 2045 is currently generating about -0.09 per unit of risk. If you would invest  1,268  in PIMCO Monthly Income on December 4, 2024 and sell it today you would lose (13.00) from holding PIMCO Monthly Income or give up 1.03% of portfolio value over 90 days.

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

PIMCO Monthly Income  vs.  Fidelity ClearPath 2045

PIMCO Monthly Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days PIMCO Monthly Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of comparatively stable basic indicators, PIMCO Monthly is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Fidelity ClearPath 2045

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity ClearPath 2045 has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Fidelity ClearPath is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PIMCO Monthly and Fidelity ClearPath

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

The idea behind PIMCO Monthly Income and Fidelity ClearPath 2045 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 Transaction History module to view history of all your transactions and understand their impact on performance.