Correlation Between Fidelity Investment and Fidelity Preferred
Can any of the company-specific risk be diversified away by investing in both Fidelity Investment and Fidelity Preferred 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 Investment and Fidelity Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Investment Grade and Fidelity Preferred Securities, you can compare the effects of market volatilities on Fidelity Investment and Fidelity Preferred 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 Investment with a short position of Fidelity Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Investment and Fidelity Preferred.
Diversification Opportunities for Fidelity Investment and Fidelity Preferred
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fidelity and Fidelity is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Investment Grade and Fidelity Preferred Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Preferred and Fidelity Investment 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 Investment Grade are associated (or correlated) with Fidelity Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Preferred has no effect on the direction of Fidelity Investment i.e., Fidelity Investment and Fidelity Preferred go up and down completely randomly.
Pair Corralation between Fidelity Investment and Fidelity Preferred
Given the investment horizon of 90 days Fidelity Investment Grade is expected to generate 1.44 times more return on investment than Fidelity Preferred. However, Fidelity Investment is 1.44 times more volatile than Fidelity Preferred Securities. It trades about 0.04 of its potential returns per unit of risk. Fidelity Preferred Securities is currently generating about -0.05 per unit of risk. If you would invest 4,305 in Fidelity Investment Grade on August 30, 2024 and sell it today you would earn a total of 16.00 from holding Fidelity Investment Grade or generate 0.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Investment Grade vs. Fidelity Preferred Securities
Performance |
| Timeline |
| Fidelity Investment Grade |
| Fidelity Preferred |
Fidelity Investment and Fidelity Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Investment and Fidelity Preferred
The main advantage of trading using opposite Fidelity Investment and Fidelity Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Investment position performs unexpectedly, Fidelity Preferred 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 Preferred will offset losses from the drop in Fidelity Preferred's long position.| Fidelity Investment vs. Fidelity Investment Grade | Fidelity Investment vs. Fidelity Preferred Securities | Fidelity Investment vs. Fidelity Limited Term | Fidelity Investment vs. Fidelity Corporate Bond |
| Fidelity Preferred vs. Fidelity Investment Grade | Fidelity Preferred vs. Fidelity Investment Grade | Fidelity Preferred vs. Fidelity High Yield | Fidelity Preferred vs. Fidelity Corporate Bond |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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