Correlation Between Fidelity Puritan and Telecommunications
Can any of the company-specific risk be diversified away by investing in both Fidelity Puritan and Telecommunications 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 Puritan and Telecommunications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Puritan Fund and Telecommunications Portfolio Telecommunications, you can compare the effects of market volatilities on Fidelity Puritan and Telecommunications 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 Puritan with a short position of Telecommunications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Puritan and Telecommunications.
Diversification Opportunities for Fidelity Puritan and Telecommunications
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and Telecommunications is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Puritan Fund and Telecommunications Portfolio T in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecommunications and Fidelity Puritan 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 Puritan Fund are associated (or correlated) with Telecommunications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telecommunications has no effect on the direction of Fidelity Puritan i.e., Fidelity Puritan and Telecommunications go up and down completely randomly.
Pair Corralation between Fidelity Puritan and Telecommunications
Assuming the 90 days horizon Fidelity Puritan is expected to generate 1.33 times less return on investment than Telecommunications. But when comparing it to its historical volatility, Fidelity Puritan Fund is 1.7 times less risky than Telecommunications. It trades about 0.1 of its potential returns per unit of risk. Telecommunications Portfolio Telecommunications is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,141 in Telecommunications Portfolio Telecommunications on August 29, 2024 and sell it today you would earn a total of 1,633 from holding Telecommunications Portfolio Telecommunications or generate 39.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Puritan Fund vs. Telecommunications Portfolio T
Performance |
| Timeline |
| Fidelity Puritan |
| Telecommunications |
Fidelity Puritan and Telecommunications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Puritan and Telecommunications
The main advantage of trading using opposite Fidelity Puritan and Telecommunications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Puritan position performs unexpectedly, Telecommunications 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 Telecommunications will offset losses from the drop in Telecommunications' long position.| Fidelity Puritan vs. Fidelity Balanced Fund | Fidelity Puritan vs. Fidelity Magellan Fund | Fidelity Puritan vs. Fidelity Growth Income | Fidelity Puritan vs. Fidelity Equity Income Fund |
| Telecommunications vs. Fidelity Freedom 2015 | Telecommunications vs. Fidelity Puritan Fund | Telecommunications vs. Fidelity Puritan Fund | Telecommunications vs. Fidelity Pennsylvania Municipal |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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