Correlation Between Fidelity Sustainable and Fidelity Simplicity

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

By analyzing existing cross correlation between Fidelity Sustainable Multi Asset and Fidelity Simplicity Rmd, you can compare the effects of market volatilities on Fidelity Sustainable and Fidelity Simplicity 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 Sustainable with a short position of Fidelity Simplicity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Sustainable and Fidelity Simplicity.

Diversification Opportunities for Fidelity Sustainable and Fidelity Simplicity

0.99

Correlation Coefficient

Fidelity Sustainable  Fidelity Simplicity

No risk reduction

The 3 months correlation between Fidelity and Fidelity is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Sustainable Multi Ass and Fidelity Simplicity Rmd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Simplicity Rmd and Fidelity Sustainable 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 Sustainable Multi Asset are associated (or correlated) with Fidelity Simplicity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Simplicity Rmd has no effect on the direction of Fidelity Sustainable i.e., Fidelity Sustainable and Fidelity Simplicity go up and down completely randomly.

Pair Corralation between Fidelity Sustainable and Fidelity Simplicity

Assuming the 90 days horizon Fidelity Sustainable Multi Asset is expected to under-perform the Fidelity Simplicity. In addition to that, Fidelity Sustainable is 1.26 times more volatile than Fidelity Simplicity Rmd. It trades about -0.17 of its total potential returns per unit of risk. Fidelity Simplicity Rmd is currently generating about -0.21 per unit of volatility. If you would invest  1,105  in Fidelity Simplicity Rmd on January 29, 2024 and sell it today you would lose (23.00) from holding Fidelity Simplicity Rmd or give up 2.08% of portfolio value over 90 days.

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

Fidelity Sustainable Multi Ass  vs.  Fidelity Simplicity Rmd

Fidelity Sustainable

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Sustainable Multi Asset are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Sustainable is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Simplicity Rmd

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Simplicity Rmd are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Fidelity Simplicity 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 Sustainable and Fidelity Simplicity

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

The idea behind Fidelity Sustainable Multi Asset and Fidelity Simplicity Rmd 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.