Correlation Between Microsoft and Fidelity Total
Can any of the company-specific risk be diversified away by investing in both Microsoft and Fidelity Total 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 Microsoft and Fidelity Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Fidelity Total Bond, you can compare the effects of market volatilities on Microsoft and Fidelity Total 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 Microsoft with a short position of Fidelity Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Fidelity Total.
Diversification Opportunities for Microsoft and Fidelity Total
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Fidelity is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Fidelity Total Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Total Bond and Microsoft 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 Microsoft are associated (or correlated) with Fidelity Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Total Bond has no effect on the direction of Microsoft i.e., Microsoft and Fidelity Total go up and down completely randomly.
Pair Corralation between Microsoft and Fidelity Total
Given the investment horizon of 90 days Microsoft is expected to under-perform the Fidelity Total. In addition to that, Microsoft is 3.42 times more volatile than Fidelity Total Bond. It trades about -0.08 of its total potential returns per unit of risk. Fidelity Total Bond is currently generating about 0.04 per unit of volatility. If you would invest 936.00 in Fidelity Total Bond on October 20, 2024 and sell it today you would earn a total of 2.00 from holding Fidelity Total Bond or generate 0.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Microsoft vs. Fidelity Total Bond
Performance |
| Timeline |
| Microsoft |
| Fidelity Total Bond |
Microsoft and Fidelity Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Fidelity Total
The main advantage of trading using opposite Microsoft and Fidelity Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Fidelity Total 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 Total will offset losses from the drop in Fidelity Total's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Fidelity Total vs. Fidelity Freedom 2015 | Fidelity Total vs. Fidelity Puritan Fund | Fidelity Total vs. Fidelity Puritan Fund | Fidelity Total vs. Fidelity Pennsylvania Municipal |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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