Correlation Between Fidelity Equity-income and Osterweis Strategic
Can any of the company-specific risk be diversified away by investing in both Fidelity Equity-income and Osterweis Strategic 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 Osterweis Strategic 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 Osterweis Strategic Income, you can compare the effects of market volatilities on Fidelity Equity-income and Osterweis Strategic 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 Osterweis Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Equity-income and Osterweis Strategic.
Diversification Opportunities for Fidelity Equity-income and Osterweis Strategic
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and Osterweis is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Equity Income Fund and Osterweis Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Osterweis Strategic 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 Osterweis Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Osterweis Strategic has no effect on the direction of Fidelity Equity-income i.e., Fidelity Equity-income and Osterweis Strategic go up and down completely randomly.
Pair Corralation between Fidelity Equity-income and Osterweis Strategic
Assuming the 90 days horizon Fidelity Equity Income Fund is expected to generate 4.26 times more return on investment than Osterweis Strategic. However, Fidelity Equity-income is 4.26 times more volatile than Osterweis Strategic Income. It trades about 0.07 of its potential returns per unit of risk. Osterweis Strategic Income is currently generating about 0.23 per unit of risk. If you would invest 6,450 in Fidelity Equity Income Fund on August 26, 2024 and sell it today you would earn a total of 1,551 from holding Fidelity Equity Income Fund or generate 24.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Equity Income Fund vs. Osterweis Strategic Income
Performance |
| Timeline |
| Fidelity Equity Income |
| Osterweis Strategic |
Fidelity Equity-income and Osterweis Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Equity-income and Osterweis Strategic
The main advantage of trading using opposite Fidelity Equity-income and Osterweis Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Equity-income position performs unexpectedly, Osterweis Strategic 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 Osterweis Strategic will offset losses from the drop in Osterweis Strategic's long position.The idea behind Fidelity Equity Income Fund and Osterweis Strategic Income 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.
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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