Correlation Between IShares SP and Fidelity Momentum
Can any of the company-specific risk be diversified away by investing in both IShares SP and Fidelity Momentum 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 IShares SP and Fidelity Momentum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares SP 500 and Fidelity Momentum Factor, you can compare the effects of market volatilities on IShares SP and Fidelity Momentum 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 IShares SP with a short position of Fidelity Momentum. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and Fidelity Momentum.
Diversification Opportunities for IShares SP and Fidelity Momentum
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and Fidelity is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP 500 and Fidelity Momentum Factor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Momentum Factor and IShares SP 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 iShares SP 500 are associated (or correlated) with Fidelity Momentum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Momentum Factor has no effect on the direction of IShares SP i.e., IShares SP and Fidelity Momentum go up and down completely randomly.
Pair Corralation between IShares SP and Fidelity Momentum
Considering the 90-day investment horizon IShares SP is expected to generate 1.11 times less return on investment than Fidelity Momentum. In addition to that, IShares SP is 1.08 times more volatile than Fidelity Momentum Factor. It trades about 0.11 of its total potential returns per unit of risk. Fidelity Momentum Factor is currently generating about 0.13 per unit of volatility. If you would invest 4,774 in Fidelity Momentum Factor on August 28, 2024 and sell it today you would earn a total of 2,362 from holding Fidelity Momentum Factor or generate 49.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares SP 500 vs. Fidelity Momentum Factor
Performance |
| Timeline |
| iShares SP 500 |
| Fidelity Momentum Factor |
IShares SP and Fidelity Momentum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares SP and Fidelity Momentum
The main advantage of trading using opposite IShares SP and Fidelity Momentum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SP position performs unexpectedly, Fidelity Momentum 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 Momentum will offset losses from the drop in Fidelity Momentum's long position.| IShares SP vs. Invesco Dynamic Large | IShares SP vs. Perella Weinberg Partners | IShares SP vs. HUMANA INC | IShares SP vs. Aquagold International |
| Fidelity Momentum vs. FT Vest Equity | Fidelity Momentum vs. Northern Lights | Fidelity Momentum vs. Dimensional International High | Fidelity Momentum vs. First Trust Exchange Traded |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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