Correlation Between PIMCO Mortgage and Fidelity International

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

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

Diversification Opportunities for PIMCO Mortgage and Fidelity International

0.73

Correlation Coefficient

PIMCO Mortgage  Fidelity International

Poor diversification

The 3 months correlation between PIMCO and Fidelity is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Mortgage Backed Securiti and Fidelity International Multifa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity International and PIMCO Mortgage 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 Mortgage Backed Securities are associated (or correlated) with Fidelity International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity International has no effect on the direction of PIMCO Mortgage i.e., PIMCO Mortgage and Fidelity International go up and down completely randomly.

Pair Corralation between PIMCO Mortgage and Fidelity International

Given the investment horizon of 90 days PIMCO Mortgage Backed Securities is expected to under-perform the Fidelity International. But the etf apears to be less risky and, when comparing its historical volatility, PIMCO Mortgage Backed Securities is 2.14 times less risky than Fidelity International. The etf trades about -0.1 of its potential returns per unit of risk. The Fidelity International Multifactor is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,386  in Fidelity International Multifactor on October 27, 2024 and sell it today you would earn a total of  442.00  from holding Fidelity International Multifactor or generate 18.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	17.21%
Values	Daily Returns

PIMCO Mortgage Backed Securiti  vs.  Fidelity International Multifa

PIMCO Mortgage Backed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PIMCO Mortgage Backed Securities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, PIMCO Mortgage is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Fidelity International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity International Multifactor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Fidelity International is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with PIMCO Mortgage and Fidelity International

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

The idea behind PIMCO Mortgage Backed Securities and Fidelity International Multifactor 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.