Correlation Between Us Government and Fidelity Salem
Can any of the company-specific risk be diversified away by investing in both Us Government and Fidelity Salem 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 Us Government and Fidelity Salem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Us Government Plus and Fidelity Salem Street, you can compare the effects of market volatilities on Us Government and Fidelity Salem 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 Us Government with a short position of Fidelity Salem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Government and Fidelity Salem.
Diversification Opportunities for Us Government and Fidelity Salem
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GVPIX and Fidelity is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Us Government Plus and Fidelity Salem Street in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Salem Street and Us Government 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 Us Government Plus are associated (or correlated) with Fidelity Salem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Salem Street has no effect on the direction of Us Government i.e., Us Government and Fidelity Salem go up and down completely randomly.
Pair Corralation between Us Government and Fidelity Salem
Assuming the 90 days horizon Us Government Plus is expected to under-perform the Fidelity Salem. In addition to that, Us Government is 1.48 times more volatile than Fidelity Salem Street. It trades about -0.01 of its total potential returns per unit of risk. Fidelity Salem Street is currently generating about 0.06 per unit of volatility. If you would invest 1,038 in Fidelity Salem Street on September 12, 2024 and sell it today you would earn a total of 275.00 from holding Fidelity Salem Street or generate 26.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Us Government Plus vs. Fidelity Salem Street
Performance |
| Timeline |
| Us Government Plus |
| Fidelity Salem Street |
Us Government and Fidelity Salem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Us Government and Fidelity Salem
The main advantage of trading using opposite Us Government and Fidelity Salem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Government position performs unexpectedly, Fidelity Salem 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 Salem will offset losses from the drop in Fidelity Salem's long position.| Us Government vs. SCOR PK | Us Government vs. Morningstar Unconstrained Allocation | Us Government vs. Via Renewables | Us Government vs. Bondbloxx ETF Trust |
| Fidelity Salem vs. Lord Abbett Affiliated | Fidelity Salem vs. M Large Cap | Fidelity Salem vs. Aqr Large Cap | Fidelity Salem vs. American Mutual Fund |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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