Correlation Between Fidelity and Fidelity 500
Can any of the company-specific risk be diversified away by investing in both Fidelity and Fidelity 500 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 and Fidelity 500 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Bond Index and Fidelity 500 Index, you can compare the effects of market volatilities on Fidelity and Fidelity 500 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 with a short position of Fidelity 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity and Fidelity 500.
Diversification Opportunities for Fidelity and Fidelity 500
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fidelity and Fidelity is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Bond Index and Fidelity 500 Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity 500 Index and Fidelity 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 Bond Index are associated (or correlated) with Fidelity 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity 500 Index has no effect on the direction of Fidelity i.e., Fidelity and Fidelity 500 go up and down completely randomly.
Pair Corralation between Fidelity and Fidelity 500
Assuming the 90 days horizon Fidelity is expected to generate 5.43 times less return on investment than Fidelity 500. But when comparing it to its historical volatility, Fidelity Bond Index is 1.98 times less risky than Fidelity 500. It trades about 0.04 of its potential returns per unit of risk. Fidelity 500 Index is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 13,958 in Fidelity 500 Index on November 5, 2024 and sell it today you would earn a total of 7,029 from holding Fidelity 500 Index or generate 50.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Bond Index vs. Fidelity 500 Index
Performance |
| Timeline |
| Fidelity Bond Index |
| Fidelity 500 Index |
Fidelity and Fidelity 500 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity and Fidelity 500
The main advantage of trading using opposite Fidelity and Fidelity 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity position performs unexpectedly, Fidelity 500 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 500 will offset losses from the drop in Fidelity 500's long position.| Fidelity vs. Fidelity International Index | Fidelity vs. Fidelity Total International | Fidelity vs. Fidelity Total Market | Fidelity vs. Fidelity Extended Market |
| Fidelity 500 vs. Fidelity Total Market | Fidelity 500 vs. Fidelity Extended Market | Fidelity 500 vs. Fidelity Zero Total | Fidelity 500 vs. Fidelity Small Cap |
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.
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