Correlation Between Fidelity Equity-income and Fidelity Dividend
Can any of the company-specific risk be diversified away by investing in both Fidelity Equity-income and Fidelity Dividend 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 Equity-income and Fidelity Dividend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Equity Income Fund and Fidelity Dividend Growth, you can compare the effects of market volatilities on Fidelity Equity-income and Fidelity Dividend 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 Equity-income with a short position of Fidelity Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Equity-income and Fidelity Dividend.
Diversification Opportunities for Fidelity Equity-income and Fidelity Dividend
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fidelity and Fidelity is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Equity Income Fund and Fidelity Dividend Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Dividend Growth and Fidelity Equity-income 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 Equity Income Fund are associated (or correlated) with Fidelity Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Dividend Growth has no effect on the direction of Fidelity Equity-income i.e., Fidelity Equity-income and Fidelity Dividend go up and down completely randomly.
Pair Corralation between Fidelity Equity-income and Fidelity Dividend
Assuming the 90 days horizon Fidelity Equity-income is expected to generate 1.2 times less return on investment than Fidelity Dividend. But when comparing it to its historical volatility, Fidelity Equity Income Fund is 1.37 times less risky than Fidelity Dividend. It trades about 0.18 of its potential returns per unit of risk. Fidelity Dividend Growth is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 3,870 in Fidelity Dividend Growth on August 26, 2024 and sell it today you would earn a total of 124.00 from holding Fidelity Dividend Growth or generate 3.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Equity Income Fund vs. Fidelity Dividend Growth
Performance |
| Timeline |
| Fidelity Equity Income |
| Fidelity Dividend Growth |
Fidelity Equity-income and Fidelity Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Equity-income and Fidelity Dividend
The main advantage of trading using opposite Fidelity Equity-income and Fidelity Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Equity-income position performs unexpectedly, Fidelity Dividend 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 Fidelity Dividend will offset losses from the drop in Fidelity Dividend's long position.The idea behind Fidelity Equity Income Fund and Fidelity Dividend Growth pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Fidelity Dividend vs. Fidelity Mid Cap Stock | Fidelity Dividend vs. Fidelity Equity Income Fund | Fidelity Dividend vs. Fidelity Low Priced Stock | Fidelity Dividend vs. Fidelity Diversified International |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |