Correlation Between Pimco Income and Fidelity Advisor

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

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

Diversification Opportunities for Pimco Income and Fidelity Advisor

0.68

Correlation Coefficient

Pimco Income  Fidelity Advisor

Poor diversification

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

Pair Corralation between Pimco Income and Fidelity Advisor

Assuming the 90 days horizon Pimco Income is expected to generate 3.97 times less return on investment than Fidelity Advisor. In addition to that, Pimco Income is 1.14 times more volatile than Fidelity Advisor Strategic. It trades about 0.03 of its total potential returns per unit of risk. Fidelity Advisor Strategic is currently generating about 0.14 per unit of volatility. If you would invest  1,160  in Fidelity Advisor Strategic on August 31, 2024 and sell it today you would earn a total of  18.00  from holding Fidelity Advisor Strategic or generate 1.55% return on investment over 90 days.

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

Pimco Income Fund  vs.  Fidelity Advisor Strategic

Pimco Income

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Income Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Pimco Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Advisor Str

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Strategic are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Fidelity Advisor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pimco Income and Fidelity Advisor

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

The idea behind Pimco Income Fund and Fidelity Advisor Strategic 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.