Correlation Between American Funds and Fidelity Series
Can any of the company-specific risk be diversified away by investing in both American Funds and Fidelity Series 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 American Funds and Fidelity Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Government and Fidelity Series Government, you can compare the effects of market volatilities on American Funds and Fidelity Series 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 American Funds with a short position of Fidelity Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Fidelity Series.
Diversification Opportunities for American Funds and Fidelity Series
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between American and Fidelity is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Government and Fidelity Series Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Series Gove and American Funds 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 American Funds Government are associated (or correlated) with Fidelity Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Series Gove has no effect on the direction of American Funds i.e., American Funds and Fidelity Series go up and down completely randomly.
Pair Corralation between American Funds and Fidelity Series
Assuming the 90 days horizon American Funds Government is expected to generate 0.85 times more return on investment than Fidelity Series. However, American Funds Government is 1.17 times less risky than Fidelity Series. It trades about -0.09 of its potential returns per unit of risk. Fidelity Series Government is currently generating about -0.08 per unit of risk. If you would invest 1,186 in American Funds Government on August 28, 2024 and sell it today you would lose (6.00) from holding American Funds Government or give up 0.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Government vs. Fidelity Series Government
Performance |
| Timeline |
| American Funds Government |
| Fidelity Series Gove |
American Funds and Fidelity Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Fidelity Series
The main advantage of trading using opposite American Funds and Fidelity Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Fidelity Series 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 Series will offset losses from the drop in Fidelity Series' long position.| American Funds vs. Touchstone Large Cap | American Funds vs. Aqr Large Cap | American Funds vs. Massmutual Select T | American Funds vs. Siit Large Cap |
| Fidelity Series vs. Fidelity Short Term Treasury | Fidelity Series vs. Fidelity Inflation Protected Bond | Fidelity Series vs. Fidelity Long Term Treasury | Fidelity Series vs. Fidelity Emerging Markets |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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