Correlation Between Fidelity Trend and Pimco Dynamic

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

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

Diversification Opportunities for Fidelity Trend and Pimco Dynamic

-0.78

Correlation Coefficient

Fidelity Trend  Pimco Dynamic

Pay attention - limited upside

The 3 months correlation between Fidelity and Pimco is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Trend Fund and Pimco Dynamic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Dynamic Income and Fidelity Trend 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 Trend Fund are associated (or correlated) with Pimco Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Dynamic Income has no effect on the direction of Fidelity Trend i.e., Fidelity Trend and Pimco Dynamic go up and down completely randomly.

Pair Corralation between Fidelity Trend and Pimco Dynamic

Assuming the 90 days horizon Fidelity Trend Fund is expected to under-perform the Pimco Dynamic. In addition to that, Fidelity Trend is 4.91 times more volatile than Pimco Dynamic Income. It trades about -0.11 of its total potential returns per unit of risk. Pimco Dynamic Income is currently generating about 0.45 per unit of volatility. If you would invest  1,771  in Pimco Dynamic Income on December 28, 2024 and sell it today you would earn a total of  201.00  from holding Pimco Dynamic Income or generate 11.35% return on investment over 90 days.

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

Fidelity Trend Fund  vs.  Pimco Dynamic Income

Fidelity Trend

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Trend Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pimco Dynamic Income

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Dynamic Income are ranked lower than 35 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly unfluctuating fundamental indicators, Pimco Dynamic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Fidelity Trend and Pimco Dynamic

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

The idea behind Fidelity Trend Fund and Pimco Dynamic Income 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.