Correlation Between Fidelity New and Government Street
Can any of the company-specific risk be diversified away by investing in both Fidelity New and Government Street 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 New and Government Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity New Millennium and Government Street Equity, you can compare the effects of market volatilities on Fidelity New and Government Street 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 New with a short position of Government Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity New and Government Street.
Diversification Opportunities for Fidelity New and Government Street
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Government is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity New Millennium and Government Street Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Government Street Equity and Fidelity New 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 New Millennium are associated (or correlated) with Government Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Government Street Equity has no effect on the direction of Fidelity New i.e., Fidelity New and Government Street go up and down completely randomly.
Pair Corralation between Fidelity New and Government Street
Assuming the 90 days horizon Fidelity New Millennium is expected to generate 1.05 times more return on investment than Government Street. However, Fidelity New is 1.05 times more volatile than Government Street Equity. It trades about 0.14 of its potential returns per unit of risk. Government Street Equity is currently generating about -0.06 per unit of risk. If you would invest 6,228 in Fidelity New Millennium on September 13, 2024 and sell it today you would earn a total of 100.00 from holding Fidelity New Millennium or generate 1.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity New Millennium vs. Government Street Equity
Performance |
| Timeline |
| Fidelity New Millennium |
| Government Street Equity |
Fidelity New and Government Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity New and Government Street
The main advantage of trading using opposite Fidelity New and Government Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity New position performs unexpectedly, Government Street 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 Government Street will offset losses from the drop in Government Street's long position.| Fidelity New vs. Fidelity Focused Stock | Fidelity New vs. Fidelity Large Cap | Fidelity New vs. Computers Portfolio Puters | Fidelity New vs. Fidelity Trend Fund |
| Government Street vs. Government Street Mid Cap | Government Street vs. Prudential Jennison International | Government Street vs. Fidelity New Markets | Government Street vs. Ohio Variable College |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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