Correlation Between Dow Jones and Fidelity Series
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Fidelity Series 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 Dow Jones and Fidelity Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Fidelity Series Real, you can compare the effects of market volatilities on Dow Jones and Fidelity Series 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 Dow Jones with a short position of Fidelity Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Fidelity Series.
Diversification Opportunities for Dow Jones and Fidelity Series
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dow and Fidelity is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Fidelity Series Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Series Real and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Fidelity Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Series Real has no effect on the direction of Dow Jones i.e., Dow Jones and Fidelity Series go up and down completely randomly.
Pair Corralation between Dow Jones and Fidelity Series
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 3.63 times more return on investment than Fidelity Series. However, Dow Jones is 3.63 times more volatile than Fidelity Series Real. It trades about 0.16 of its potential returns per unit of risk. Fidelity Series Real is currently generating about 0.23 per unit of risk. If you would invest 3,857,103 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 633,962 from holding Dow Jones Industrial or generate 16.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Dow Jones Industrial vs. Fidelity Series Real
Performance |
| Timeline |
Dow Jones and Fidelity Series Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Fidelity Series Real
Pair trading matchups for Fidelity Series
Pair Trading with Dow Jones and Fidelity Series
The main advantage of trading using opposite Dow Jones and Fidelity Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Fidelity Series 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 Series will offset losses from the drop in Fidelity Series' long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Fidelity Series vs. Rationalpier 88 Convertible | Fidelity Series vs. Bbh Intermediate Municipal | Fidelity Series vs. Artisan High Income | Fidelity Series vs. Touchstone Premium Yield |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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