Correlation Between Fidelity Capital and Redwood Systematic
Can any of the company-specific risk be diversified away by investing in both Fidelity Capital and Redwood Systematic 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 Redwood Systematic 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 Redwood Systematic Macro, you can compare the effects of market volatilities on Fidelity Capital and Redwood Systematic 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 Redwood Systematic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Capital and Redwood Systematic.
Diversification Opportunities for Fidelity Capital and Redwood Systematic
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Redwood is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Capital Income and Redwood Systematic Macro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redwood Systematic Macro 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 Redwood Systematic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redwood Systematic Macro has no effect on the direction of Fidelity Capital i.e., Fidelity Capital and Redwood Systematic go up and down completely randomly.
Pair Corralation between Fidelity Capital and Redwood Systematic
Assuming the 90 days horizon Fidelity Capital Income is expected to generate 0.46 times more return on investment than Redwood Systematic. However, Fidelity Capital Income is 2.19 times less risky than Redwood Systematic. It trades about 0.14 of its potential returns per unit of risk. Redwood Systematic Macro is currently generating about 0.02 per unit of risk. If you would invest 1,027 in Fidelity Capital Income on September 13, 2024 and sell it today you would earn a total of 8.00 from holding Fidelity Capital Income or generate 0.78% 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. Redwood Systematic Macro
Performance |
| Timeline |
| Fidelity Capital Income |
| Redwood Systematic Macro |
Fidelity Capital and Redwood Systematic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Capital and Redwood Systematic
The main advantage of trading using opposite Fidelity Capital and Redwood Systematic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Capital position performs unexpectedly, Redwood Systematic 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 Redwood Systematic will offset losses from the drop in Redwood Systematic'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 |
| Redwood Systematic vs. Redwood Managed Volatility | Redwood Systematic vs. Redwood Managed Volatility | Redwood Systematic vs. Redwood Managed Volatility | Redwood Systematic vs. Redwood Alphafactor Tactical |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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