Correlation Between Fidelity 500 and Pear Tree
Can any of the company-specific risk be diversified away by investing in both Fidelity 500 and Pear Tree 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 Pear Tree 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 Pear Tree Polaris, you can compare the effects of market volatilities on Fidelity 500 and Pear Tree 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 Pear Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity 500 and Pear Tree.
Diversification Opportunities for Fidelity 500 and Pear Tree
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fidelity and Pear is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity 500 Index and Pear Tree Polaris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pear Tree Polaris 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 Pear Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pear Tree Polaris has no effect on the direction of Fidelity 500 i.e., Fidelity 500 and Pear Tree go up and down completely randomly.
Pair Corralation between Fidelity 500 and Pear Tree
Assuming the 90 days horizon Fidelity 500 Index is expected to generate 1.08 times more return on investment than Pear Tree. However, Fidelity 500 is 1.08 times more volatile than Pear Tree Polaris. It trades about 0.18 of its potential returns per unit of risk. Pear Tree Polaris is currently generating about -0.22 per unit of risk. If you would invest 20,202 in Fidelity 500 Index on August 31, 2024 and sell it today you would earn a total of 670.00 from holding Fidelity 500 Index or generate 3.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity 500 Index vs. Pear Tree Polaris
Performance |
| Timeline |
| Fidelity 500 Index |
| Pear Tree Polaris |
Fidelity 500 and Pear Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity 500 and Pear Tree
The main advantage of trading using opposite Fidelity 500 and Pear Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity 500 position performs unexpectedly, Pear Tree 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 Pear Tree will offset losses from the drop in Pear Tree'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 |
| Pear Tree vs. Doubleline Emerging Markets | Pear Tree vs. Goldman Sachs Emerging | Pear Tree vs. Rbc Emerging Markets | Pear Tree vs. Locorr Market Trend |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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