Correlation Between Fidelity Series and Capital Group
Can any of the company-specific risk be diversified away by investing in both Fidelity Series and Capital Group 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 Capital Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Series Government and Capital Group Equity, you can compare the effects of market volatilities on Fidelity Series and Capital Group 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 Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Series and Capital Group.
Diversification Opportunities for Fidelity Series and Capital Group
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fidelity and Capital is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Series Government and Capital Group Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Equity 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 Government are associated (or correlated) with Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Equity has no effect on the direction of Fidelity Series i.e., Fidelity Series and Capital Group go up and down completely randomly.
Pair Corralation between Fidelity Series and Capital Group
Assuming the 90 days horizon Fidelity Series is expected to generate 4.11 times less return on investment than Capital Group. But when comparing it to its historical volatility, Fidelity Series Government is 2.4 times less risky than Capital Group. It trades about 0.07 of its potential returns per unit of risk. Capital Group Equity is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,344 in Capital Group Equity on September 1, 2024 and sell it today you would earn a total of 436.00 from holding Capital Group Equity or generate 13.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Fidelity Series Government vs. Capital Group Equity
Performance |
| Timeline |
| Fidelity Series Gove |
| Capital Group Equity |
Fidelity Series and Capital Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Series and Capital Group
The main advantage of trading using opposite Fidelity Series and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Series position performs unexpectedly, Capital Group 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 Capital Group will offset losses from the drop in Capital Group'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 |
| Capital Group vs. Goldman Sachs Government | Capital Group vs. Us Government Securities | Capital Group vs. Fidelity Series Government | Capital Group vs. Short Term Government Fund |
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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