Correlation Between Fidelity Asset and Strategic Allocation
Can any of the company-specific risk be diversified away by investing in both Fidelity Asset and Strategic Allocation 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 Asset and Strategic Allocation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Asset Manager and Strategic Allocation Servative, you can compare the effects of market volatilities on Fidelity Asset and Strategic Allocation 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 Asset with a short position of Strategic Allocation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Asset and Strategic Allocation.
Diversification Opportunities for Fidelity Asset and Strategic Allocation
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Strategic is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Asset Manager and Strategic Allocation Servative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Allocation and Fidelity Asset 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 Asset Manager are associated (or correlated) with Strategic Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Allocation has no effect on the direction of Fidelity Asset i.e., Fidelity Asset and Strategic Allocation go up and down completely randomly.
Pair Corralation between Fidelity Asset and Strategic Allocation
Assuming the 90 days horizon Fidelity Asset Manager is expected to generate 1.2 times more return on investment than Strategic Allocation. However, Fidelity Asset is 1.2 times more volatile than Strategic Allocation Servative. It trades about 0.1 of its potential returns per unit of risk. Strategic Allocation Servative is currently generating about 0.08 per unit of risk. If you would invest 1,272 in Fidelity Asset Manager on September 12, 2024 and sell it today you would earn a total of 364.00 from holding Fidelity Asset Manager or generate 28.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Asset Manager vs. Strategic Allocation Servative
Performance |
| Timeline |
| Fidelity Asset Manager |
| Strategic Allocation |
Fidelity Asset and Strategic Allocation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Asset and Strategic Allocation
The main advantage of trading using opposite Fidelity Asset and Strategic Allocation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Asset position performs unexpectedly, Strategic Allocation 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 Strategic Allocation will offset losses from the drop in Strategic Allocation's long position.| Fidelity Asset vs. Strategic Allocation Servative | Fidelity Asset vs. Strategic Allocation Aggressive | Fidelity Asset vs. Value Fund Investor | Fidelity Asset vs. International Growth Fund |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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