Correlation Between Fidelity Balanced and Absolute Strategies
Can any of the company-specific risk be diversified away by investing in both Fidelity Balanced and Absolute Strategies 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 Balanced and Absolute Strategies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Balanced Fund and Absolute Strategies Fund, you can compare the effects of market volatilities on Fidelity Balanced and Absolute Strategies 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 Balanced with a short position of Absolute Strategies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Balanced and Absolute Strategies.
Diversification Opportunities for Fidelity Balanced and Absolute Strategies
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fidelity and Absolute is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Balanced Fund and Absolute Strategies Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Strategies and Fidelity Balanced 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 Balanced Fund are associated (or correlated) with Absolute Strategies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Strategies has no effect on the direction of Fidelity Balanced i.e., Fidelity Balanced and Absolute Strategies go up and down completely randomly.
Pair Corralation between Fidelity Balanced and Absolute Strategies
Assuming the 90 days horizon Fidelity Balanced Fund is expected to generate 1.24 times more return on investment than Absolute Strategies. However, Fidelity Balanced is 1.24 times more volatile than Absolute Strategies Fund. It trades about 0.11 of its potential returns per unit of risk. Absolute Strategies Fund is currently generating about -0.07 per unit of risk. If you would invest 2,215 in Fidelity Balanced Fund on August 24, 2024 and sell it today you would earn a total of 804.00 from holding Fidelity Balanced Fund or generate 36.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.18% |
| Values | Daily Returns |
Fidelity Balanced Fund vs. Absolute Strategies Fund
Performance |
| Timeline |
| Fidelity Balanced |
| Absolute Strategies |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Fidelity Balanced and Absolute Strategies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Balanced and Absolute Strategies
The main advantage of trading using opposite Fidelity Balanced and Absolute Strategies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Balanced position performs unexpectedly, Absolute Strategies 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 Absolute Strategies will offset losses from the drop in Absolute Strategies' long position.| Fidelity Balanced vs. Fidelity Puritan Fund | Fidelity Balanced vs. Fidelity Low Priced Stock | Fidelity Balanced vs. Fidelity International Discovery | Fidelity Balanced vs. Fidelity Contrafund |
| Absolute Strategies vs. Fidelity Sai Inflationfocused | Absolute Strategies vs. Ab Bond Inflation | Absolute Strategies vs. Loomis Sayles Inflation | Absolute Strategies vs. Short Duration Inflation |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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