Correlation Between Fidelity Convertible and Columbia Convertible
Can any of the company-specific risk be diversified away by investing in both Fidelity Convertible and Columbia Convertible 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 Fidelity Convertible and Columbia Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Vertible Securities and Columbia Vertible Securities, you can compare the effects of market volatilities on Fidelity Convertible and Columbia Convertible 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 Fidelity Convertible with a short position of Columbia Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Convertible and Columbia Convertible.
Diversification Opportunities for Fidelity Convertible and Columbia Convertible
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Columbia is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Vertible Securities and Columbia Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Convertible and Fidelity 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 Fidelity Vertible Securities are associated (or correlated) with Columbia Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Convertible has no effect on the direction of Fidelity Convertible i.e., Fidelity Convertible and Columbia Convertible go up and down completely randomly.
Pair Corralation between Fidelity Convertible and Columbia Convertible
Assuming the 90 days horizon Fidelity Vertible Securities is expected to generate 1.05 times more return on investment than Columbia Convertible. However, Fidelity Convertible is 1.05 times more volatile than Columbia Vertible Securities. It trades about 0.15 of its potential returns per unit of risk. Columbia Vertible Securities is currently generating about 0.14 per unit of risk. If you would invest 3,009 in Fidelity Vertible Securities on August 24, 2024 and sell it today you would earn a total of 691.00 from holding Fidelity Vertible Securities or generate 22.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Fidelity Vertible Securities vs. Columbia Vertible Securities
Performance |
| Timeline |
| Fidelity Convertible |
| Columbia Convertible |
Fidelity Convertible and Columbia Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Convertible and Columbia Convertible
The main advantage of trading using opposite Fidelity Convertible and Columbia Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Convertible position performs unexpectedly, Columbia Convertible 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 Columbia Convertible will offset losses from the drop in Columbia Convertible's long position.The idea behind Fidelity Vertible Securities and Columbia Vertible Securities pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |