Correlation Between PIMCO Enhanced and Fidelity Total

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

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

Diversification Opportunities for PIMCO Enhanced and Fidelity Total

0.66

Correlation Coefficient

PIMCO Enhanced  Fidelity Total

Poor diversification

The 3 months correlation between PIMCO and Fidelity is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Enhanced Low and Fidelity Total Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Total Bond and PIMCO Enhanced 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 Enhanced Low are associated (or correlated) with Fidelity Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Total Bond has no effect on the direction of PIMCO Enhanced i.e., PIMCO Enhanced and Fidelity Total go up and down completely randomly.

Pair Corralation between PIMCO Enhanced and Fidelity Total

Given the investment horizon of 90 days PIMCO Enhanced is expected to generate 1.27 times less return on investment than Fidelity Total. But when comparing it to its historical volatility, PIMCO Enhanced Low is 4.39 times less risky than Fidelity Total. It trades about 0.19 of its potential returns per unit of risk. Fidelity Total Bond is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4,453  in Fidelity Total Bond on March 16, 2024 and sell it today you would earn a total of  67.00  from holding Fidelity Total Bond or generate 1.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

PIMCO Enhanced Low  vs.  Fidelity Total Bond

PIMCO Enhanced Low

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO Enhanced Low are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, PIMCO Enhanced is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Fidelity Total Bond

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Total Bond are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Fidelity Total is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with PIMCO Enhanced and Fidelity Total

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

The idea behind PIMCO Enhanced Low and Fidelity Total Bond 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.