Correlation Between Fidelity Short-term and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Fidelity Short-term and Dow Jones 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 Short-term and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Short Term Bond and Dow Jones Industrial, you can compare the effects of market volatilities on Fidelity Short-term and Dow Jones 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 Short-term with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Short-term and Dow Jones.
Diversification Opportunities for Fidelity Short-term and Dow Jones
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Fidelity and Dow is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Short Term Bond and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Fidelity Short-term 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 Short Term Bond are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Fidelity Short-term i.e., Fidelity Short-term and Dow Jones go up and down completely randomly.
Pair Corralation between Fidelity Short-term and Dow Jones
Assuming the 90 days horizon Fidelity Short-term is expected to generate 20.56 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Fidelity Short Term Bond is 8.72 times less risky than Dow Jones. It trades about 0.14 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 4,263,520 in Dow Jones Industrial on November 9, 2024 and sell it today you would earn a total of 211,243 from holding Dow Jones Industrial or generate 4.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Short Term Bond vs. Dow Jones Industrial
Performance |
| Timeline |
Fidelity Short-term and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Fidelity Short Term Bond
Pair trading matchups for Fidelity Short-term
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Fidelity Short-term and Dow Jones
The main advantage of trading using opposite Fidelity Short-term and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Short-term position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Fidelity Short-term vs. Fidelity Investment Grade | Fidelity Short-term vs. Fidelity Total Bond | Fidelity Short-term vs. Fidelity Gnma Fund | Fidelity Short-term vs. Fidelity Intermediate Bond |
| Dow Jones vs. Douglas Emmett | Dow Jones vs. Todos Medical | Dow Jones vs. Eastern Co | Dow Jones vs. Merit Medical Systems |
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 Stocks Directory module to find actively traded stocks across global markets.
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