Correlation Between Pimco California and Fidelity Advisor

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Can any of the company-specific risk be diversified away by investing in both Pimco California 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 California 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 California Municipal and Fidelity Advisor Gold, you can compare the effects of market volatilities on Pimco California 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 California with a short position of Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pimco California and Fidelity Advisor.

Diversification Opportunities for Pimco California and Fidelity Advisor

0.41
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Pimco and Fidelity is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Pimco California Municipal and Fidelity Advisor Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Gold and Pimco California 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 California Municipal 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 Gold has no effect on the direction of Pimco California i.e., Pimco California and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Pimco California and Fidelity Advisor

Assuming the 90 days horizon Pimco California Municipal is expected to under-perform the Fidelity Advisor. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pimco California Municipal is 3.37 times less risky than Fidelity Advisor. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Fidelity Advisor Gold is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,484  in Fidelity Advisor Gold on October 4, 2024 and sell it today you would lose (25.00) from holding Fidelity Advisor Gold or give up 1.01% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Pimco California Municipal  vs.  Fidelity Advisor Gold

 Performance 
       Timeline  
Pimco California Mun 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Pimco California Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Pimco California is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Fidelity Advisor Gold 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Fidelity Advisor Gold 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 forward indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pimco California and Fidelity Advisor Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pimco California and Fidelity Advisor

The main advantage of trading using opposite Pimco California and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco California 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 California Municipal and Fidelity Advisor Gold 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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