Correlation Between Fidelity Preferred and Fidelity Tactical
Can any of the company-specific risk be diversified away by investing in both Fidelity Preferred and Fidelity Tactical 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 Preferred and Fidelity Tactical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Preferred Securities and Fidelity Tactical Bond, you can compare the effects of market volatilities on Fidelity Preferred and Fidelity Tactical 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 Preferred with a short position of Fidelity Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Preferred and Fidelity Tactical.
Diversification Opportunities for Fidelity Preferred and Fidelity Tactical
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fidelity and Fidelity is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Preferred Securities and Fidelity Tactical Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Tactical Bond and Fidelity Preferred 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 Preferred Securities are associated (or correlated) with Fidelity Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Tactical Bond has no effect on the direction of Fidelity Preferred i.e., Fidelity Preferred and Fidelity Tactical go up and down completely randomly.
Pair Corralation between Fidelity Preferred and Fidelity Tactical
Given the investment horizon of 90 days Fidelity Preferred is expected to generate 3.17 times less return on investment than Fidelity Tactical. But when comparing it to its historical volatility, Fidelity Preferred Securities is 1.59 times less risky than Fidelity Tactical. It trades about 0.08 of its potential returns per unit of risk. Fidelity Tactical Bond is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 4,876 in Fidelity Tactical Bond on September 4, 2024 and sell it today you would earn a total of 64.00 from holding Fidelity Tactical Bond 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 Preferred Securities vs. Fidelity Tactical Bond
Performance |
| Timeline |
| Fidelity Preferred |
| Fidelity Tactical Bond |
Fidelity Preferred and Fidelity Tactical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Preferred and Fidelity Tactical
The main advantage of trading using opposite Fidelity Preferred and Fidelity Tactical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Preferred position performs unexpectedly, Fidelity Tactical 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 Tactical will offset losses from the drop in Fidelity Tactical's long position.| Fidelity Preferred vs. Fidelity Investment Grade | Fidelity Preferred vs. Fidelity Investment Grade | Fidelity Preferred vs. Fidelity High Yield | Fidelity Preferred vs. Fidelity Corporate Bond |
| Fidelity Tactical vs. Fidelity Investment Grade | Fidelity Tactical vs. Fidelity Investment Grade | Fidelity Tactical vs. Fidelity Sustainable Low | Fidelity Tactical vs. Fidelity Preferred Securities |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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