Correlation Between Fidelity Total and IShares Core
Can any of the company-specific risk be diversified away by investing in both Fidelity Total and IShares Core 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 Total and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Total Bond and iShares Core 5 10, you can compare the effects of market volatilities on Fidelity Total and IShares Core 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 Total with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Total and IShares Core.
Diversification Opportunities for Fidelity Total and IShares Core
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Fidelity and IShares is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Total Bond and iShares Core 5 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core 5 and Fidelity Total 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 Total Bond are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core 5 has no effect on the direction of Fidelity Total i.e., Fidelity Total and IShares Core go up and down completely randomly.
Pair Corralation between Fidelity Total and IShares Core
Given the investment horizon of 90 days Fidelity Total is expected to generate 1.47 times less return on investment than IShares Core. But when comparing it to its historical volatility, Fidelity Total Bond is 1.06 times less risky than IShares Core. It trades about 0.06 of its potential returns per unit of risk. iShares Core 5 10 is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,301 in iShares Core 5 10 on August 29, 2024 and sell it today you would earn a total of 28.00 from holding iShares Core 5 10 or generate 0.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Total Bond vs. iShares Core 5 10
Performance |
| Timeline |
| Fidelity Total Bond |
| iShares Core 5 |
Fidelity Total and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Total and IShares Core
The main advantage of trading using opposite Fidelity Total and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Total position performs unexpectedly, IShares Core 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 IShares Core will offset losses from the drop in IShares Core's long position.| Fidelity Total vs. Fidelity Corporate Bond | Fidelity Total vs. Fidelity Limited Term | Fidelity Total vs. Fidelity High Yield | Fidelity Total vs. Fidelity High Dividend |
| IShares Core vs. iShares Core 1 5 | IShares Core vs. iShares Core International | IShares Core vs. iShares Core 10 | IShares Core vs. iShares Edge Investment |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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