Correlation Between Fidelity Capital and Federated High
Can any of the company-specific risk be diversified away by investing in both Fidelity Capital and Federated High 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 Capital and Federated High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Capital Income and Federated High Yield, you can compare the effects of market volatilities on Fidelity Capital and Federated High 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 Capital with a short position of Federated High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Capital and Federated High.
Diversification Opportunities for Fidelity Capital and Federated High
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Federated is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Capital Income and Federated High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated High Yield and Fidelity Capital 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 Capital Income are associated (or correlated) with Federated High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated High Yield has no effect on the direction of Fidelity Capital i.e., Fidelity Capital and Federated High go up and down completely randomly.
Pair Corralation between Fidelity Capital and Federated High
Assuming the 90 days horizon Fidelity Capital Income is expected to generate 2.25 times more return on investment than Federated High. However, Fidelity Capital is 2.25 times more volatile than Federated High Yield. It trades about 0.14 of its potential returns per unit of risk. Federated High Yield is currently generating about 0.19 per unit of risk. If you would invest 1,015 in Fidelity Capital Income on November 1, 2024 and sell it today you would earn a total of 13.00 from holding Fidelity Capital Income or generate 1.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Capital Income vs. Federated High Yield
Performance |
| Timeline |
| Fidelity Capital Income |
| Federated High Yield |
Fidelity Capital and Federated High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Capital and Federated High
The main advantage of trading using opposite Fidelity Capital and Federated High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Capital position performs unexpectedly, Federated High 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 Federated High will offset losses from the drop in Federated High's long position.| Fidelity Capital vs. Fidelity High Income | Fidelity Capital vs. Fidelity New Markets | Fidelity Capital vs. Fidelity Total Bond | Fidelity Capital vs. Fidelity Balanced Fund |
| Federated High vs. American Funds Retirement | Federated High vs. Hartford Moderate Allocation | Federated High vs. Calvert Moderate Allocation | Federated High vs. Voya Retirement Moderate |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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