Correlation Between Fidelity Series and Columbia

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

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

Diversification Opportunities for Fidelity Series and Columbia

0.93

Correlation Coefficient

Fidelity Series  Columbia

Almost no diversification

The 3 months correlation between Fidelity and Columbia is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Series Government and Columbia Government Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Government and Fidelity Series 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 Fidelity Series Government are associated (or correlated) with Columbia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Government has no effect on the direction of Fidelity Series i.e., Fidelity Series and Columbia go up and down completely randomly.

Pair Corralation between Fidelity Series and Columbia

Assuming the 90 days horizon Fidelity Series Government is expected to generate 0.69 times more return on investment than Columbia. However, Fidelity Series Government is 1.45 times less risky than Columbia. It trades about -0.05 of its potential returns per unit of risk. Columbia Government Mortgage is currently generating about -0.03 per unit of risk. If you would invest  916.00  in Fidelity Series Government on March 1, 2025 and sell it today you would lose (9.00) from holding Fidelity Series Government or give up 0.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Fidelity Series Government  vs.  Columbia Government Mortgage

Fidelity Series Gove

Risk-Adjusted Performance

Very Weak

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

Columbia Government

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Fidelity Series and Columbia

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

The idea behind Fidelity Series Government and Columbia Government Mortgage 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.

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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.