Correlation Between Fidelity Balanced and Federated Hermes
Can any of the company-specific risk be diversified away by investing in both Fidelity Balanced and Federated Hermes 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 Federated Hermes 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 Federated Hermes Conservative, you can compare the effects of market volatilities on Fidelity Balanced and Federated Hermes 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 Federated Hermes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Balanced and Federated Hermes.
Diversification Opportunities for Fidelity Balanced and Federated Hermes
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Federated is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Balanced Fund and Federated Hermes Conservative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes Con 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 Federated Hermes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Hermes Con has no effect on the direction of Fidelity Balanced i.e., Fidelity Balanced and Federated Hermes go up and down completely randomly.
Pair Corralation between Fidelity Balanced and Federated Hermes
Assuming the 90 days horizon Fidelity Balanced Fund is expected to generate 5.91 times more return on investment than Federated Hermes. However, Fidelity Balanced is 5.91 times more volatile than Federated Hermes Conservative. It trades about 0.12 of its potential returns per unit of risk. Federated Hermes Conservative is currently generating about 0.22 per unit of risk. If you would invest 2,745 in Fidelity Balanced Fund on September 3, 2024 and sell it today you would earn a total of 324.00 from holding Fidelity Balanced Fund or generate 11.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Balanced Fund vs. Federated Hermes Conservative
Performance |
| Timeline |
| Fidelity Balanced |
| Federated Hermes Con |
Fidelity Balanced and Federated Hermes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Balanced and Federated Hermes
The main advantage of trading using opposite Fidelity Balanced and Federated Hermes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Balanced position performs unexpectedly, Federated Hermes 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 Hermes will offset losses from the drop in Federated Hermes' 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 |
| Federated Hermes vs. Alpine High Yield | Federated Hermes vs. Ppm High Yield | Federated Hermes vs. American Century High | Federated Hermes vs. Pgim High Yield |
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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