Correlation Between Fidelity Select and Energy Fund
Can any of the company-specific risk be diversified away by investing in both Fidelity Select and Energy Fund 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 Energy Fund 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 Energy Fund Investor, you can compare the effects of market volatilities on Fidelity Select and Energy Fund 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 Energy Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Select and Energy Fund.
Diversification Opportunities for Fidelity Select and Energy Fund
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Fidelity and Energy is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Select Portfolios and Energy Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Fund Investor 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 Energy Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Fund Investor has no effect on the direction of Fidelity Select i.e., Fidelity Select and Energy Fund go up and down completely randomly.
Pair Corralation between Fidelity Select and Energy Fund
Assuming the 90 days horizon Fidelity Select Portfolios is expected to generate 1.05 times more return on investment than Energy Fund. However, Fidelity Select is 1.05 times more volatile than Energy Fund Investor. It trades about 0.03 of its potential returns per unit of risk. Energy Fund Investor is currently generating about 0.03 per unit of risk. If you would invest 5,457 in Fidelity Select Portfolios on August 28, 2024 and sell it today you would earn a total of 803.00 from holding Fidelity Select Portfolios or generate 14.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Select Portfolios vs. Energy Fund Investor
Performance |
| Timeline |
| Fidelity Select Port |
| Energy Fund Investor |
Fidelity Select and Energy Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Select and Energy Fund
The main advantage of trading using opposite Fidelity Select and Energy Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Select position performs unexpectedly, Energy Fund 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 Energy Fund will offset losses from the drop in Energy Fund's long position.| Fidelity Select vs. Fidelity Natural Resources | Fidelity Select vs. Gold Portfolio Gold | Fidelity Select vs. Health Care Services | Fidelity Select vs. Materials Portfolio Materials |
| Energy Fund vs. Energy Services Fund | Energy Fund vs. Basic Materials Fund | Energy Fund vs. Health Care Fund | Energy Fund vs. Precious Metals 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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