Correlation Between Fidelity Income and Fidelity Salem
Can any of the company-specific risk be diversified away by investing in both Fidelity Income and Fidelity Salem 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 Income and Fidelity Salem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Income Replacement and Fidelity Salem Street, you can compare the effects of market volatilities on Fidelity Income and Fidelity Salem 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 Income with a short position of Fidelity Salem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Income and Fidelity Salem.
Diversification Opportunities for Fidelity Income and Fidelity Salem
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Income Replacement and Fidelity Salem Street in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Salem Street and Fidelity Income 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 Income Replacement are associated (or correlated) with Fidelity Salem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Salem Street has no effect on the direction of Fidelity Income i.e., Fidelity Income and Fidelity Salem go up and down completely randomly.
Pair Corralation between Fidelity Income and Fidelity Salem
Assuming the 90 days horizon Fidelity Income is expected to generate 1.01 times less return on investment than Fidelity Salem. But when comparing it to its historical volatility, Fidelity Income Replacement is 2.2 times less risky than Fidelity Salem. It trades about 0.12 of its potential returns per unit of risk. Fidelity Salem Street is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,233 in Fidelity Salem Street on October 20, 2024 and sell it today you would earn a total of 8.00 from holding Fidelity Salem Street or generate 0.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Income Replacement vs. Fidelity Salem Street
Performance |
| Timeline |
| Fidelity Income Repl |
| Fidelity Salem Street |
Fidelity Income and Fidelity Salem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Income and Fidelity Salem
The main advantage of trading using opposite Fidelity Income and Fidelity Salem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Income position performs unexpectedly, Fidelity Salem 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 Salem will offset losses from the drop in Fidelity Salem's long position.| Fidelity Income vs. Aqr Sustainable Long Short | Fidelity Income vs. Leader Short Term Bond | Fidelity Income vs. Delaware Investments Ultrashort | Fidelity Income vs. Oakhurst Short Duration |
| Fidelity Salem vs. Guidepath Managed Futures | Fidelity Salem vs. Ab Bond Inflation | Fidelity Salem vs. Asg Managed Futures | Fidelity Salem vs. Great West Inflation Protected 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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