Correlation Between Fidelity Advantage and PIMCO Investment

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

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

Diversification Opportunities for Fidelity Advantage and PIMCO Investment

-0.68

Correlation Coefficient

Fidelity Advantage  PIMCO Investment

Excellent diversification

The 3 months correlation between Fidelity and PIMCO is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advantage Bitcoin and PIMCO Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Investment Grade and Fidelity Advantage 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 Fidelity Advantage Bitcoin are associated (or correlated) with PIMCO Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Investment Grade has no effect on the direction of Fidelity Advantage i.e., Fidelity Advantage and PIMCO Investment go up and down completely randomly.

Pair Corralation between Fidelity Advantage and PIMCO Investment

Assuming the 90 days trading horizon Fidelity Advantage Bitcoin is expected to under-perform the PIMCO Investment. In addition to that, Fidelity Advantage is 5.14 times more volatile than PIMCO Investment Grade. It trades about -0.05 of its total potential returns per unit of risk. PIMCO Investment Grade is currently generating about 0.04 per unit of volatility. If you would invest  1,605  in PIMCO Investment Grade on December 30, 2024 and sell it today you would earn a total of  20.00  from holding PIMCO Investment Grade or generate 1.25% return on investment over 90 days.

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

Fidelity Advantage Bitcoin  vs.  PIMCO Investment Grade

Fidelity Advantage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Advantage Bitcoin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

PIMCO Investment Grade

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Investment Grade are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, PIMCO Investment is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Fidelity Advantage and PIMCO Investment

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

The idea behind Fidelity Advantage Bitcoin and PIMCO Investment Grade 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.