Correlation Between Fidelity Capital and California Bond
Can any of the company-specific risk be diversified away by investing in both Fidelity Capital and California Bond 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 California Bond 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 California Bond Fund, you can compare the effects of market volatilities on Fidelity Capital and California Bond 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 California Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Capital and California Bond.
Diversification Opportunities for Fidelity Capital and California Bond
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and California is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Capital Income and California Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Bond 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 California Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Bond has no effect on the direction of Fidelity Capital i.e., Fidelity Capital and California Bond go up and down completely randomly.
Pair Corralation between Fidelity Capital and California Bond
Assuming the 90 days horizon Fidelity Capital Income is expected to generate 1.2 times more return on investment than California Bond. However, Fidelity Capital is 1.2 times more volatile than California Bond Fund. It trades about 0.29 of its potential returns per unit of risk. California Bond Fund is currently generating about -0.04 per unit of risk. If you would invest 1,014 in Fidelity Capital Income on October 24, 2024 and sell it today you would earn a total of 18.00 from holding Fidelity Capital Income or generate 1.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Capital Income vs. California Bond Fund
Performance |
| Timeline |
| Fidelity Capital Income |
| California Bond |
Fidelity Capital and California Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Capital and California Bond
The main advantage of trading using opposite Fidelity Capital and California Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Capital position performs unexpectedly, California Bond 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 California Bond will offset losses from the drop in California Bond'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 |
| California Bond vs. The Texas Fund | California Bond vs. Small Cap Stock | California Bond vs. T Rowe Price | California Bond vs. Rbc Funds Trust |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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