Correlation Between Fidelity Managed and American Funds
Can any of the company-specific risk be diversified away by investing in both Fidelity Managed and American Funds 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 Managed and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Managed Retirement and American Funds 2040, you can compare the effects of market volatilities on Fidelity Managed and American Funds 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 Managed with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Managed and American Funds.
Diversification Opportunities for Fidelity Managed and American Funds
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fidelity and American is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Managed Retirement and American Funds 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2040 and Fidelity Managed 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 Managed Retirement are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2040 has no effect on the direction of Fidelity Managed i.e., Fidelity Managed and American Funds go up and down completely randomly.
Pair Corralation between Fidelity Managed and American Funds
Assuming the 90 days horizon Fidelity Managed is expected to generate 2.83 times less return on investment than American Funds. But when comparing it to its historical volatility, Fidelity Managed Retirement is 1.67 times less risky than American Funds. It trades about 0.06 of its potential returns per unit of risk. American Funds 2040 is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,135 in American Funds 2040 on August 29, 2024 and sell it today you would earn a total of 28.00 from holding American Funds 2040 or generate 1.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Managed Retirement vs. American Funds 2040
Performance |
| Timeline |
| Fidelity Managed Ret |
| American Funds 2040 |
Fidelity Managed and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Managed and American Funds
The main advantage of trading using opposite Fidelity Managed and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Managed position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Fidelity Managed vs. Fidelity Freedom Index | Fidelity Managed vs. Fidelity Freedom Index | Fidelity Managed vs. Fidelity Freedom Index | Fidelity Managed vs. ABIVAX Socit Anonyme |
| American Funds vs. Target Retirement 2040 | American Funds vs. Qs Moderate Growth | American Funds vs. Fidelity Managed Retirement | American Funds vs. Dimensional Retirement Income |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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