Correlation Between Fidelity 500 and Fidelity Total
Can any of the company-specific risk be diversified away by investing in both Fidelity 500 and Fidelity Total 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 Fidelity Total 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 Fidelity Total Market, you can compare the effects of market volatilities on Fidelity 500 and Fidelity Total 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 Fidelity Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity 500 and Fidelity Total.
Diversification Opportunities for Fidelity 500 and Fidelity Total
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Fidelity and Fidelity is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity 500 Index and Fidelity Total Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Total Market 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 Fidelity Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Total Market has no effect on the direction of Fidelity 500 i.e., Fidelity 500 and Fidelity Total go up and down completely randomly.
Pair Corralation between Fidelity 500 and Fidelity Total
Assuming the 90 days horizon Fidelity 500 is expected to generate 1.14 times less return on investment than Fidelity Total. But when comparing it to its historical volatility, Fidelity 500 Index is 1.04 times less risky than Fidelity Total. It trades about 0.14 of its potential returns per unit of risk. Fidelity Total Market is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 15,377 in Fidelity Total Market on August 28, 2024 and sell it today you would earn a total of 1,248 from holding Fidelity Total Market or generate 8.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity 500 Index vs. Fidelity Total Market
Performance |
| Timeline |
| Fidelity 500 Index |
| Fidelity Total Market |
Fidelity 500 and Fidelity Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity 500 and Fidelity Total
The main advantage of trading using opposite Fidelity 500 and Fidelity Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity 500 position performs unexpectedly, Fidelity Total 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 Total will offset losses from the drop in Fidelity Total's 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 |
| Fidelity Total vs. Fidelity Zero Total | Fidelity Total vs. Fidelity 500 Index | Fidelity Total vs. Fidelity International Index | Fidelity Total vs. Fidelity Bond Index |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |