Correlation Between Fidelity Stock and Value Line
Can any of the company-specific risk be diversified away by investing in both Fidelity Stock and Value Line 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 Stock and Value Line into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Stock Selector and Value Line Small, you can compare the effects of market volatilities on Fidelity Stock and Value Line 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 Stock with a short position of Value Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Stock and Value Line.
Diversification Opportunities for Fidelity Stock and Value Line
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Value is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Stock Selector and Value Line Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Line Small and Fidelity Stock 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 Stock Selector are associated (or correlated) with Value Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Line Small has no effect on the direction of Fidelity Stock i.e., Fidelity Stock and Value Line go up and down completely randomly.
Pair Corralation between Fidelity Stock and Value Line
Assuming the 90 days horizon Fidelity Stock is expected to generate 1.45 times less return on investment than Value Line. But when comparing it to its historical volatility, Fidelity Stock Selector is 1.34 times less risky than Value Line. It trades about 0.07 of its potential returns per unit of risk. Value Line Small is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,658 in Value Line Small on August 29, 2024 and sell it today you would earn a total of 2,055 from holding Value Line Small or generate 44.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Stock Selector vs. Value Line Small
Performance |
| Timeline |
| Fidelity Stock Selector |
| Value Line Small |
Fidelity Stock and Value Line Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Stock and Value Line
The main advantage of trading using opposite Fidelity Stock and Value Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Stock position performs unexpectedly, Value Line 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 Value Line will offset losses from the drop in Value Line's long position.| Fidelity Stock vs. Clearbridge Energy Mlp | Fidelity Stock vs. Dreyfus Natural Resources | Fidelity Stock vs. Energy Services Fund | Fidelity Stock vs. Icon Natural Resources |
| Value Line vs. Dreyfusstandish Global Fixed | Value Line vs. Barings Global Floating | Value Line vs. Kinetics Global Fund | Value Line vs. Ab Global Bond |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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