Correlation Between Pimco Dynamic and Fidelity Trend

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

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

Diversification Opportunities for Pimco Dynamic and Fidelity Trend

-0.25

Correlation Coefficient

Pimco Dynamic  Fidelity Trend

Very good diversification

The 3 months correlation between Pimco and Fidelity is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Dynamic Income and Fidelity Trend Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Trend and Pimco Dynamic 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 Dynamic Income are associated (or correlated) with Fidelity Trend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Trend has no effect on the direction of Pimco Dynamic i.e., Pimco Dynamic and Fidelity Trend go up and down completely randomly.

Pair Corralation between Pimco Dynamic and Fidelity Trend

Considering the 90-day investment horizon Pimco Dynamic is expected to generate 7.23 times less return on investment than Fidelity Trend. But when comparing it to its historical volatility, Pimco Dynamic Income is 2.71 times less risky than Fidelity Trend. It trades about 0.07 of its potential returns per unit of risk. Fidelity Trend Fund is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  20,840  in Fidelity Trend Fund on September 15, 2024 and sell it today you would earn a total of  895.00  from holding Fidelity Trend Fund or generate 4.29% return on investment over 90 days.

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

Pimco Dynamic Income  vs.  Fidelity Trend Fund

Pimco Dynamic Income

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Dynamic Income are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong fundamental indicators, Pimco Dynamic is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Fidelity Trend

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Trend Fund are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity Trend showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pimco Dynamic and Fidelity Trend

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

The idea behind Pimco Dynamic Income and Fidelity Trend Fund 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.