Correlation Between Fidelity Extended and Fidelity Zero
Can any of the company-specific risk be diversified away by investing in both Fidelity Extended and Fidelity Zero 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 Extended and Fidelity Zero into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Extended Market and Fidelity Zero Total, you can compare the effects of market volatilities on Fidelity Extended and Fidelity Zero 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 Extended with a short position of Fidelity Zero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Extended and Fidelity Zero.
Diversification Opportunities for Fidelity Extended and Fidelity Zero
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Fidelity is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Extended Market and Fidelity Zero Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Zero Total and Fidelity Extended 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 Extended Market are associated (or correlated) with Fidelity Zero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Zero Total has no effect on the direction of Fidelity Extended i.e., Fidelity Extended and Fidelity Zero go up and down completely randomly.
Pair Corralation between Fidelity Extended and Fidelity Zero
Assuming the 90 days horizon Fidelity Extended Market is expected to generate 1.39 times more return on investment than Fidelity Zero. However, Fidelity Extended is 1.39 times more volatile than Fidelity Zero Total. It trades about 0.14 of its potential returns per unit of risk. Fidelity Zero Total is currently generating about 0.13 per unit of risk. If you would invest 8,074 in Fidelity Extended Market on August 29, 2024 and sell it today you would earn a total of 1,795 from holding Fidelity Extended Market or generate 22.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Extended Market vs. Fidelity Zero Total
Performance |
| Timeline |
| Fidelity Extended Market |
| Fidelity Zero Total |
Fidelity Extended and Fidelity Zero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Extended and Fidelity Zero
The main advantage of trading using opposite Fidelity Extended and Fidelity Zero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Extended position performs unexpectedly, Fidelity Zero 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 Zero will offset losses from the drop in Fidelity Zero's long position.| Fidelity Extended vs. Fidelity International Index | Fidelity Extended vs. Fidelity 500 Index | Fidelity Extended vs. Fidelity Bond Index | Fidelity Extended vs. Fidelity Total Market |
| Fidelity Zero vs. Fidelity Zero International | Fidelity Zero vs. Fidelity Zero Large | Fidelity Zero vs. Fidelity Zero Extended | Fidelity Zero vs. Fidelity Total Market |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |