Correlation Between Fundamental Large and Fidelity Series
Can any of the company-specific risk be diversified away by investing in both Fundamental Large and Fidelity Series 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 Fundamental Large and Fidelity Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fundamental Large Cap and Fidelity Series 1000, you can compare the effects of market volatilities on Fundamental Large and Fidelity Series 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 Fundamental Large with a short position of Fidelity Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fundamental Large and Fidelity Series.
Diversification Opportunities for Fundamental Large and Fidelity Series
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FUNDAMENTAL and Fidelity is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Fundamental Large Cap and Fidelity Series 1000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Series 1000 and Fundamental Large 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 Fundamental Large Cap are associated (or correlated) with Fidelity Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Series 1000 has no effect on the direction of Fundamental Large i.e., Fundamental Large and Fidelity Series go up and down completely randomly.
Pair Corralation between Fundamental Large and Fidelity Series
Assuming the 90 days horizon Fundamental Large Cap is expected to generate 1.2 times more return on investment than Fidelity Series. However, Fundamental Large is 1.2 times more volatile than Fidelity Series 1000. It trades about 0.1 of its potential returns per unit of risk. Fidelity Series 1000 is currently generating about 0.08 per unit of risk. If you would invest 5,285 in Fundamental Large Cap on September 4, 2024 and sell it today you would earn a total of 3,001 from holding Fundamental Large Cap or generate 56.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fundamental Large Cap vs. Fidelity Series 1000
Performance |
| Timeline |
| Fundamental Large Cap |
| Fidelity Series 1000 |
Fundamental Large and Fidelity Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fundamental Large and Fidelity Series
The main advantage of trading using opposite Fundamental Large and Fidelity Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fundamental Large position performs unexpectedly, Fidelity Series 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 Series will offset losses from the drop in Fidelity Series' long position.| Fundamental Large vs. Regional Bank Fund | Fundamental Large vs. Regional Bank Fund | Fundamental Large vs. Multimanager Lifestyle Moderate | Fundamental Large vs. Multimanager Lifestyle Balanced |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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