Correlation Between Fidelity 500 and Six Circles
Can any of the company-specific risk be diversified away by investing in both Fidelity 500 and Six Circles 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 500 and Six Circles into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity 500 Index and Six Circles Managed, you can compare the effects of market volatilities on Fidelity 500 and Six Circles 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 500 with a short position of Six Circles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity 500 and Six Circles.
Diversification Opportunities for Fidelity 500 and Six Circles
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Six is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity 500 Index and Six Circles Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Six Circles Managed and Fidelity 500 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 500 Index are associated (or correlated) with Six Circles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Six Circles Managed has no effect on the direction of Fidelity 500 i.e., Fidelity 500 and Six Circles go up and down completely randomly.
Pair Corralation between Fidelity 500 and Six Circles
Assuming the 90 days horizon Fidelity 500 Index is expected to generate 1.02 times more return on investment than Six Circles. However, Fidelity 500 is 1.02 times more volatile than Six Circles Managed. It trades about 0.15 of its potential returns per unit of risk. Six Circles Managed is currently generating about 0.15 per unit of risk. If you would invest 20,236 in Fidelity 500 Index on August 28, 2024 and sell it today you would earn a total of 531.00 from holding Fidelity 500 Index or generate 2.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Fidelity 500 Index vs. Six Circles Managed
Performance |
| Timeline |
| Fidelity 500 Index |
| Six Circles Managed |
Fidelity 500 and Six Circles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity 500 and Six Circles
The main advantage of trading using opposite Fidelity 500 and Six Circles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity 500 position performs unexpectedly, Six Circles 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 Six Circles will offset losses from the drop in Six Circles' long position.| Fidelity 500 vs. Fidelity Total Market | Fidelity 500 vs. Fidelity Extended Market | Fidelity 500 vs. Fidelity Zero Total | Fidelity 500 vs. Fidelity Small Cap |
| Six Circles vs. Jhancock Disciplined Value | Six Circles vs. Qs Large Cap | Six Circles vs. Aqr Large Cap | Six Circles vs. T Rowe Price |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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