Correlation Between PIMCO Mortgage and Fidelity Covington
Can any of the company-specific risk be diversified away by investing in both PIMCO Mortgage and Fidelity Covington 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 Covington 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 Covington Trust, you can compare the effects of market volatilities on PIMCO Mortgage and Fidelity Covington 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 Covington. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIMCO Mortgage and Fidelity Covington.
Diversification Opportunities for PIMCO Mortgage and Fidelity Covington
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PIMCO and Fidelity is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding PIMCO Mortgage Backed Securiti and Fidelity Covington Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Covington Trust 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 Covington. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Covington Trust has no effect on the direction of PIMCO Mortgage i.e., PIMCO Mortgage and Fidelity Covington go up and down completely randomly.
Pair Corralation between PIMCO Mortgage and Fidelity Covington
Given the investment horizon of 90 days PIMCO Mortgage is expected to generate 1.74 times less return on investment than Fidelity Covington. But when comparing it to its historical volatility, PIMCO Mortgage Backed Securities is 2.87 times less risky than Fidelity Covington. It trades about 0.25 of its potential returns per unit of risk. Fidelity Covington Trust is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,451 in Fidelity Covington Trust on November 9, 2024 and sell it today you would earn a total of 74.00 from holding Fidelity Covington Trust or generate 3.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PIMCO Mortgage Backed Securiti vs. Fidelity Covington Trust
Performance |
| Timeline |
| PIMCO Mortgage Backed |
| Fidelity Covington Trust |
PIMCO Mortgage and Fidelity Covington Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIMCO Mortgage and Fidelity Covington
The main advantage of trading using opposite PIMCO Mortgage and Fidelity Covington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIMCO Mortgage position performs unexpectedly, Fidelity Covington 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 Covington will offset losses from the drop in Fidelity Covington's long position.| PIMCO Mortgage vs. Humana Inc | PIMCO Mortgage vs. Xtrackers California Municipal | PIMCO Mortgage vs. JPMorgan Active Value | PIMCO Mortgage vs. Formidable Fortress ETF |
| Fidelity Covington vs. Freedom Day Dividend | Fidelity Covington vs. Franklin Templeton ETF | Fidelity Covington vs. iShares MSCI China | Fidelity Covington vs. Tidal Trust II |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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