Correlation Between Fidelity Flex and Pimco Energy

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

By analyzing existing cross correlation between Fidelity Flex Servative and Pimco Energy Tactical, you can compare the effects of market volatilities on Fidelity Flex and Pimco Energy 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 Flex with a short position of Pimco Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Flex and Pimco Energy.

Diversification Opportunities for Fidelity Flex and Pimco Energy

0.45

Correlation Coefficient

Fidelity Flex  Pimco Energy

Very weak diversification

The 3 months correlation between Fidelity and Pimco is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Flex Servative and Pimco Energy Tactical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Energy Tactical and Fidelity Flex 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 Flex Servative are associated (or correlated) with Pimco Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Energy Tactical has no effect on the direction of Fidelity Flex i.e., Fidelity Flex and Pimco Energy go up and down completely randomly.

Pair Corralation between Fidelity Flex and Pimco Energy

Assuming the 90 days horizon Fidelity Flex is expected to generate 7.14 times less return on investment than Pimco Energy. But when comparing it to its historical volatility, Fidelity Flex Servative is 18.76 times less risky than Pimco Energy. It trades about 0.24 of its potential returns per unit of risk. Pimco Energy Tactical is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,002  in Pimco Energy Tactical on October 25, 2024 and sell it today you would earn a total of  760.00  from holding Pimco Energy Tactical or generate 37.96% return on investment over 90 days.

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

Fidelity Flex Servative  vs.  Pimco Energy Tactical

Fidelity Flex Servative

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Flex Servative are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Fidelity Flex is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pimco Energy Tactical

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Energy Tactical are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Pimco Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidelity Flex and Pimco Energy

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

The idea behind Fidelity Flex Servative and Pimco Energy Tactical 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.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.