Correlation Between Dow Jones and Fidelity Value
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Fidelity Value 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 Value 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 Value Fund, you can compare the effects of market volatilities on Dow Jones and Fidelity Value 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 Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Fidelity Value.
Diversification Opportunities for Dow Jones and Fidelity Value
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and Fidelity is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Fidelity Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Value 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 Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Value has no effect on the direction of Dow Jones i.e., Dow Jones and Fidelity Value go up and down completely randomly.
Pair Corralation between Dow Jones and Fidelity Value
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.2 times less return on investment than Fidelity Value. But when comparing it to its historical volatility, Dow Jones Industrial is 1.56 times less risky than Fidelity Value. It trades about 0.08 of its potential returns per unit of risk. Fidelity Value Fund is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,204 in Fidelity Value Fund on September 14, 2024 and sell it today you would earn a total of 451.00 from holding Fidelity Value Fund or generate 37.46% 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 Value Fund
Performance |
| Timeline |
Dow Jones and Fidelity Value Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Fidelity Value Fund
Pair trading matchups for Fidelity Value
Pair Trading with Dow Jones and Fidelity Value
The main advantage of trading using opposite Dow Jones and Fidelity Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Fidelity Value 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 Value will offset losses from the drop in Fidelity Value's long position.| Dow Jones vs. Hurco Companies | Dow Jones vs. Tyson Foods | Dow Jones vs. MYR Group | Dow Jones vs. Cannae Holdings |
| Fidelity Value vs. Fidelity Mid Cap Stock | Fidelity Value vs. Fidelity Low Priced Stock | Fidelity Value vs. Fidelity International Discovery | Fidelity Value vs. Fidelity Capital Appreciation |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |