Correlation Between Absolute Convertible and Fidelity Managed
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible and Fidelity Managed 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 Absolute Convertible and Fidelity Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Convertible Arbitrage and Fidelity Managed Retirement, you can compare the effects of market volatilities on Absolute Convertible and Fidelity Managed 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 Absolute Convertible with a short position of Fidelity Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Fidelity Managed.
Diversification Opportunities for Absolute Convertible and Fidelity Managed
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Absolute and Fidelity is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Fidelity Managed Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Managed Ret and Absolute Convertible 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 Absolute Convertible Arbitrage are associated (or correlated) with Fidelity Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Managed Ret has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and Fidelity Managed go up and down completely randomly.
Pair Corralation between Absolute Convertible and Fidelity Managed
Assuming the 90 days horizon Absolute Convertible is expected to generate 1.03 times less return on investment than Fidelity Managed. But when comparing it to its historical volatility, Absolute Convertible Arbitrage is 4.98 times less risky than Fidelity Managed. It trades about 0.36 of its potential returns per unit of risk. Fidelity Managed Retirement is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,856 in Fidelity Managed Retirement on September 3, 2024 and sell it today you would earn a total of 578.00 from holding Fidelity Managed Retirement or generate 11.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. Fidelity Managed Retirement
Performance |
| Timeline |
| Absolute Convertible |
| Fidelity Managed Ret |
Absolute Convertible and Fidelity Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and Fidelity Managed
The main advantage of trading using opposite Absolute Convertible and Fidelity Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible position performs unexpectedly, Fidelity Managed 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 Managed will offset losses from the drop in Fidelity Managed's long position.| Absolute Convertible vs. Dunham Porategovernment Bond | Absolute Convertible vs. John Hancock Government | Absolute Convertible vs. Government Securities Fund | Absolute Convertible vs. Ab Government Exchange |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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