Correlation Between Fidelity Limited and Fidelity Total

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

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

Diversification Opportunities for Fidelity Limited and Fidelity Total

0.68

Correlation Coefficient

Fidelity Limited  Fidelity Total

Poor diversification

The 3 months correlation between Fidelity and Fidelity is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Limited Term 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 Fidelity Limited 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 Limited Term 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 Fidelity Limited i.e., Fidelity Limited and Fidelity Total go up and down completely randomly.

Pair Corralation between Fidelity Limited and Fidelity Total

Given the investment horizon of 90 days Fidelity Limited Term is expected to generate 0.39 times more return on investment than Fidelity Total. However, Fidelity Limited Term is 2.58 times less risky than Fidelity Total. It trades about -0.09 of its potential returns per unit of risk. Fidelity Total Bond is currently generating about -0.17 per unit of risk. If you would invest  4,875  in Fidelity Limited Term on January 30, 2024 and sell it today you would lose (14.00) from holding Fidelity Limited Term or give up 0.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Fidelity Limited Term  vs.  Fidelity Total Bond

Fidelity Limited Term

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Limited Term has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Fidelity Limited is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Total Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Total Bond has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Fidelity Total is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Fidelity Limited and Fidelity Total

The main advantage of trading using opposite Fidelity Limited and Fidelity Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Limited 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 Fidelity Limited Term 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.