Correlation Between Fidelity Inflation and Fidelity Intermediate
Can any of the company-specific risk be diversified away by investing in both Fidelity Inflation and Fidelity Intermediate 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 Inflation and Fidelity Intermediate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Inflation Protected Bond and Fidelity Intermediate Government, you can compare the effects of market volatilities on Fidelity Inflation and Fidelity Intermediate 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 Inflation with a short position of Fidelity Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Inflation and Fidelity Intermediate.
Diversification Opportunities for Fidelity Inflation and Fidelity Intermediate
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Fidelity is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Inflation Protected B and Fidelity Intermediate Governme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Intermediate and Fidelity Inflation 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 Inflation Protected Bond are associated (or correlated) with Fidelity Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Intermediate has no effect on the direction of Fidelity Inflation i.e., Fidelity Inflation and Fidelity Intermediate go up and down completely randomly.
Pair Corralation between Fidelity Inflation and Fidelity Intermediate
Assuming the 90 days horizon Fidelity Inflation is expected to generate 1.31 times less return on investment than Fidelity Intermediate. In addition to that, Fidelity Inflation is 1.51 times more volatile than Fidelity Intermediate Government. It trades about 0.1 of its total potential returns per unit of risk. Fidelity Intermediate Government is currently generating about 0.21 per unit of volatility. If you would invest 970.00 in Fidelity Intermediate Government on September 12, 2024 and sell it today you would earn a total of 7.00 from holding Fidelity Intermediate Government or generate 0.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Inflation Protected B vs. Fidelity Intermediate Governme
Performance |
| Timeline |
| Fidelity Inflation |
| Fidelity Intermediate |
Fidelity Inflation and Fidelity Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Inflation and Fidelity Intermediate
The main advantage of trading using opposite Fidelity Inflation and Fidelity Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Inflation position performs unexpectedly, Fidelity Intermediate 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 Fidelity Intermediate will offset losses from the drop in Fidelity Intermediate's long position.The idea behind Fidelity Inflation Protected Bond and Fidelity Intermediate Government 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.
| Fidelity Intermediate vs. Fidelity Government Income | Fidelity Intermediate vs. Fidelity Advisor Mortgage | Fidelity Intermediate vs. Fidelity Limited Term | Fidelity Intermediate vs. Fidelity Gnma 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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