Correlation Between Fidelity Series and Metropolitan West
Can any of the company-specific risk be diversified away by investing in both Fidelity Series and Metropolitan West 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 Series and Metropolitan West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Series Floating and Metropolitan West Unconstrained, you can compare the effects of market volatilities on Fidelity Series and Metropolitan West 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 Series with a short position of Metropolitan West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Series and Metropolitan West.
Diversification Opportunities for Fidelity Series and Metropolitan West
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fidelity and Metropolitan is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Series Floating and Metropolitan West Unconstraine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan West and Fidelity Series 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 Series Floating are associated (or correlated) with Metropolitan West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan West has no effect on the direction of Fidelity Series i.e., Fidelity Series and Metropolitan West go up and down completely randomly.
Pair Corralation between Fidelity Series and Metropolitan West
Assuming the 90 days horizon Fidelity Series is expected to generate 1.17 times less return on investment than Metropolitan West. But when comparing it to its historical volatility, Fidelity Series Floating is 3.66 times less risky than Metropolitan West. It trades about 0.62 of its potential returns per unit of risk. Metropolitan West Unconstrained is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,030 in Metropolitan West Unconstrained on September 2, 2024 and sell it today you would earn a total of 8.00 from holding Metropolitan West Unconstrained or generate 0.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Series Floating vs. Metropolitan West Unconstraine
Performance |
| Timeline |
| Fidelity Series Floating |
| Metropolitan West |
Fidelity Series and Metropolitan West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Series and Metropolitan West
The main advantage of trading using opposite Fidelity Series and Metropolitan West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Series position performs unexpectedly, Metropolitan West 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 Metropolitan West will offset losses from the drop in Metropolitan West's long position.| Fidelity Series vs. Fidelity Freedom 2015 | Fidelity Series vs. Fidelity Puritan Fund | Fidelity Series vs. Fidelity Puritan Fund | Fidelity Series vs. Fidelity Pennsylvania Municipal |
| Metropolitan West vs. Artisan Thematic Fund | Metropolitan West vs. Vanguard Small Cap Growth | Metropolitan West vs. Volumetric Fund Volumetric | Metropolitan West vs. Shelton Funds |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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