Correlation Between NYSE Composite and Fidelity Stock
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Fidelity Stock 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 NYSE Composite and Fidelity Stock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Fidelity Stock Selector, you can compare the effects of market volatilities on NYSE Composite and Fidelity Stock 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 NYSE Composite with a short position of Fidelity Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Fidelity Stock.
Diversification Opportunities for NYSE Composite and Fidelity Stock
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Fidelity is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Fidelity Stock Selector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Stock Selector and NYSE Composite 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 NYSE Composite are associated (or correlated) with Fidelity Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Stock Selector has no effect on the direction of NYSE Composite i.e., NYSE Composite and Fidelity Stock go up and down completely randomly.
Pair Corralation between NYSE Composite and Fidelity Stock
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.95 times more return on investment than Fidelity Stock. However, NYSE Composite is 1.05 times less risky than Fidelity Stock. It trades about 0.05 of its potential returns per unit of risk. Fidelity Stock Selector is currently generating about 0.02 per unit of risk. If you would invest 1,531,489 in NYSE Composite on January 21, 2025 and sell it today you would earn a total of 305,223 from holding NYSE Composite or generate 19.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Fidelity Stock Selector
Performance |
| Timeline |
NYSE Composite and Fidelity Stock Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Fidelity Stock Selector
Pair trading matchups for Fidelity Stock
Pair Trading with NYSE Composite and Fidelity Stock
The main advantage of trading using opposite NYSE Composite and Fidelity Stock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Fidelity Stock 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 Stock will offset losses from the drop in Fidelity Stock's long position.| NYSE Composite vs. Kinsale Capital Group | NYSE Composite vs. Alignment Healthcare LLC | NYSE Composite vs. Old Republic International | NYSE Composite vs. LATAM Airlines Group |
| Fidelity Stock vs. John Hancock High | Fidelity Stock vs. Franklin California High | Fidelity Stock vs. Ab Global Risk | Fidelity Stock vs. California High Yield 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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