Correlation Between IShares Fundamental and Fidelity LongShort
Can any of the company-specific risk be diversified away by investing in both IShares Fundamental and Fidelity LongShort 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 IShares Fundamental and Fidelity LongShort into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Fundamental Hedged and Fidelity LongShort Alternative, you can compare the effects of market volatilities on IShares Fundamental and Fidelity LongShort 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 IShares Fundamental with a short position of Fidelity LongShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Fundamental and Fidelity LongShort.
Diversification Opportunities for IShares Fundamental and Fidelity LongShort
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and Fidelity is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding iShares Fundamental Hedged and Fidelity LongShort Alternative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity LongShort and IShares Fundamental 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 iShares Fundamental Hedged are associated (or correlated) with Fidelity LongShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity LongShort has no effect on the direction of IShares Fundamental i.e., IShares Fundamental and Fidelity LongShort go up and down completely randomly.
Pair Corralation between IShares Fundamental and Fidelity LongShort
Assuming the 90 days trading horizon IShares Fundamental is expected to generate 1.02 times less return on investment than Fidelity LongShort. But when comparing it to its historical volatility, iShares Fundamental Hedged is 1.05 times less risky than Fidelity LongShort. It trades about 0.26 of its potential returns per unit of risk. Fidelity LongShort Alternative is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,179 in Fidelity LongShort Alternative on November 7, 2024 and sell it today you would earn a total of 40.00 from holding Fidelity LongShort Alternative or generate 3.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
iShares Fundamental Hedged vs. Fidelity LongShort Alternative
Performance |
| Timeline |
| iShares Fundamental |
| Fidelity LongShort |
IShares Fundamental and Fidelity LongShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Fundamental and Fidelity LongShort
The main advantage of trading using opposite IShares Fundamental and Fidelity LongShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Fundamental position performs unexpectedly, Fidelity LongShort 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 LongShort will offset losses from the drop in Fidelity LongShort's long position.| IShares Fundamental vs. iShares Convertible Bond | IShares Fundamental vs. iShares SP Mid Cap | IShares Fundamental vs. iShares Edge MSCI | IShares Fundamental vs. iShares Flexible Monthly |
| Fidelity LongShort vs. Fidelity Global Equity | Fidelity LongShort vs. Fidelity Global Value | Fidelity LongShort vs. Fidelity Momentum ETF | Fidelity LongShort vs. Fidelity Canadian High |
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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