Correlation Between Dow Jones and Fidelity Trend
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Fidelity Trend 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 Trend 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 Trend Fund, you can compare the effects of market volatilities on Dow Jones and Fidelity Trend 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 Trend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Fidelity Trend.
Diversification Opportunities for Dow Jones and Fidelity Trend
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and Fidelity is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Fidelity Trend Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Trend 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 Trend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Trend has no effect on the direction of Dow Jones i.e., Dow Jones and Fidelity Trend go up and down completely randomly.
Pair Corralation between Dow Jones and Fidelity Trend
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.75 times less return on investment than Fidelity Trend. But when comparing it to its historical volatility, Dow Jones Industrial is 1.93 times less risky than Fidelity Trend. It trades about 0.12 of its potential returns per unit of risk. Fidelity Trend Fund is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 14,826 in Fidelity Trend Fund on August 26, 2024 and sell it today you would earn a total of 6,297 from holding Fidelity Trend Fund or generate 42.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Fidelity Trend Fund
Performance |
| Timeline |
Dow Jones and Fidelity Trend Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Fidelity Trend Fund
Pair trading matchups for Fidelity Trend
Pair Trading with Dow Jones and Fidelity Trend
The main advantage of trading using opposite Dow Jones and Fidelity Trend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Fidelity Trend 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 Trend will offset losses from the drop in Fidelity Trend's long position.| Dow Jones vs. Vistra Energy Corp | Dow Jones vs. Fluence Energy | Dow Jones vs. Old Republic International | Dow Jones vs. Empresa Distribuidora y |
| Fidelity Trend vs. Lord Abbett Growth | Fidelity Trend vs. Fidelity Advisor Series | Fidelity Trend vs. Fidelity Advisor Growth | Fidelity Trend vs. Aquagold International |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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