Correlation Between Bliss GVS and Fidelity Intermediate

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

By analyzing existing cross correlation between Bliss GVS Pharma and Fidelity Intermediate Government, you can compare the effects of market volatilities on Bliss GVS and Fidelity Intermediate 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 Bliss GVS with a short position of Fidelity Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bliss GVS and Fidelity Intermediate.

Diversification Opportunities for Bliss GVS and Fidelity Intermediate

0.05

Correlation Coefficient

Bliss GVS  Fidelity Intermediate

Significant diversification

The 3 months correlation between Bliss and Fidelity is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Bliss GVS Pharma and Fidelity Intermediate Governme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Intermediate and Bliss GVS 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 Bliss GVS Pharma are associated (or correlated) with Fidelity Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Intermediate has no effect on the direction of Bliss GVS i.e., Bliss GVS and Fidelity Intermediate go up and down completely randomly.

Pair Corralation between Bliss GVS and Fidelity Intermediate

Assuming the 90 days trading horizon Bliss GVS Pharma is expected to generate 11.35 times more return on investment than Fidelity Intermediate. However, Bliss GVS is 11.35 times more volatile than Fidelity Intermediate Government. It trades about 0.01 of its potential returns per unit of risk. Fidelity Intermediate Government is currently generating about 0.0 per unit of risk. If you would invest  11,960  in Bliss GVS Pharma on February 5, 2024 and sell it today you would lose (55.00) from holding Bliss GVS Pharma or give up 0.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	86.36%
Values	Daily Returns

Bliss GVS Pharma  vs.  Fidelity Intermediate Governme

Bliss GVS Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bliss GVS Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Bliss GVS is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Fidelity Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Intermediate Government has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Fidelity Intermediate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bliss GVS and Fidelity Intermediate

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

The idea behind Bliss GVS Pharma and Fidelity Intermediate Government 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.