Correlation Between Fidelity Select and Fidelity Natural
Can any of the company-specific risk be diversified away by investing in both Fidelity Select and Fidelity Natural 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 Select and Fidelity Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Select Portfolios and Fidelity Natural Resources, you can compare the effects of market volatilities on Fidelity Select and Fidelity Natural 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 Select with a short position of Fidelity Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Select and Fidelity Natural.
Diversification Opportunities for Fidelity Select and Fidelity Natural
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Select Portfolios and Fidelity Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Natural Res and Fidelity Select 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 Select Portfolios are associated (or correlated) with Fidelity Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Natural Res has no effect on the direction of Fidelity Select i.e., Fidelity Select and Fidelity Natural go up and down completely randomly.
Pair Corralation between Fidelity Select and Fidelity Natural
Assuming the 90 days horizon Fidelity Select Portfolios is expected to generate 1.18 times more return on investment than Fidelity Natural. However, Fidelity Select is 1.18 times more volatile than Fidelity Natural Resources. It trades about 0.24 of its potential returns per unit of risk. Fidelity Natural Resources is currently generating about 0.09 per unit of risk. If you would invest 5,917 in Fidelity Select Portfolios on August 28, 2024 and sell it today you would earn a total of 343.00 from holding Fidelity Select Portfolios or generate 5.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Select Portfolios vs. Fidelity Natural Resources
Performance |
| Timeline |
| Fidelity Select Port |
| Fidelity Natural Res |
Fidelity Select and Fidelity Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Select and Fidelity Natural
The main advantage of trading using opposite Fidelity Select and Fidelity Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Select position performs unexpectedly, Fidelity Natural 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 Natural will offset losses from the drop in Fidelity Natural's long position.| Fidelity Select vs. Fidelity Freedom 2015 | Fidelity Select vs. Fidelity Puritan Fund | Fidelity Select vs. Fidelity Puritan Fund | Fidelity Select vs. Fidelity Pennsylvania Municipal |
| Fidelity Natural vs. Fidelity Freedom 2015 | Fidelity Natural vs. Fidelity Puritan Fund | Fidelity Natural vs. Fidelity Puritan Fund | Fidelity Natural 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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