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 Floating, 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
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and Metropolitan is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Series Floating and Metropolitan West Floating 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 Floating is expected to generate 1.1 times more return on investment than Metropolitan West. However, Fidelity Series is 1.1 times more volatile than Metropolitan West Floating. It trades about 0.22 of its potential returns per unit of risk. Metropolitan West Floating is currently generating about 0.22 per unit of risk. If you would invest 735.00 in Fidelity Series Floating on September 2, 2024 and sell it today you would earn a total of 170.00 from holding Fidelity Series Floating or generate 23.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.59% |
| Values | Daily Returns |
Fidelity Series Floating vs. Metropolitan West Floating
Performance |
| Timeline |
| Fidelity Series Floating |
| Metropolitan West |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
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. Metropolitan West Unconstrained | Metropolitan West vs. Loomis Sayles Senior | Metropolitan West vs. T Rowe Price | Metropolitan West vs. Blackrock Floating Rate |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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