Correlation Between WisdomTree Yield and Fidelity Total
Can any of the company-specific risk be diversified away by investing in both WisdomTree Yield 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 WisdomTree Yield and Fidelity Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Yield Enhanced and Fidelity Total Bond, you can compare the effects of market volatilities on WisdomTree Yield 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 WisdomTree Yield with a short position of Fidelity Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Yield and Fidelity Total.
Diversification Opportunities for WisdomTree Yield and Fidelity Total
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between WisdomTree and Fidelity is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Yield Enhanced 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 WisdomTree Yield 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 WisdomTree Yield Enhanced 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 WisdomTree Yield i.e., WisdomTree Yield and Fidelity Total go up and down completely randomly.
Pair Corralation between WisdomTree Yield and Fidelity Total
Given the investment horizon of 90 days WisdomTree Yield is expected to generate 1.03 times less return on investment than Fidelity Total. But when comparing it to its historical volatility, WisdomTree Yield Enhanced is 1.03 times less risky than Fidelity Total. It trades about 0.05 of its potential returns per unit of risk. Fidelity Total Bond is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,189 in Fidelity Total Bond on September 2, 2024 and sell it today you would earn a total of 402.00 from holding Fidelity Total Bond or generate 9.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree Yield Enhanced vs. Fidelity Total Bond
Performance |
| Timeline |
| WisdomTree Yield Enhanced |
| Fidelity Total Bond |
WisdomTree Yield and Fidelity Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Yield and Fidelity Total
The main advantage of trading using opposite WisdomTree Yield and Fidelity Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Yield 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.| WisdomTree Yield vs. WisdomTree Interest Rate | WisdomTree Yield vs. WisdomTree Interest Rate | WisdomTree Yield vs. SPDR Barclays Intermediate | WisdomTree Yield vs. WisdomTree International Hedged |
| Fidelity Total vs. Fidelity Corporate Bond | Fidelity Total vs. Fidelity Limited Term | Fidelity Total vs. Fidelity High Yield | Fidelity Total vs. Fidelity High Dividend |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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