Correlation Between NYSE Composite and Fidelity Preferred
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Fidelity Preferred 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 Preferred 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 Preferred Securities, you can compare the effects of market volatilities on NYSE Composite and Fidelity Preferred 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 Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Fidelity Preferred.
Diversification Opportunities for NYSE Composite and Fidelity Preferred
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Fidelity is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Fidelity Preferred Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Preferred 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 Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Preferred has no effect on the direction of NYSE Composite i.e., NYSE Composite and Fidelity Preferred go up and down completely randomly.
Pair Corralation between NYSE Composite and Fidelity Preferred
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.3 times more return on investment than Fidelity Preferred. However, NYSE Composite is 2.3 times more volatile than Fidelity Preferred Securities. It trades about 0.24 of its potential returns per unit of risk. Fidelity Preferred Securities is currently generating about -0.08 per unit of risk. If you would invest 1,945,627 in NYSE Composite on August 26, 2024 and sell it today you would earn a total of 66,718 from holding NYSE Composite or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Fidelity Preferred Securities
Performance |
| Timeline |
NYSE Composite and Fidelity Preferred Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Fidelity Preferred Securities
Pair trading matchups for Fidelity Preferred
Pair Trading with NYSE Composite and Fidelity Preferred
The main advantage of trading using opposite NYSE Composite and Fidelity Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Fidelity Preferred 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 Preferred will offset losses from the drop in Fidelity Preferred's long position.| NYSE Composite vs. Grocery Outlet Holding | NYSE Composite vs. Tencent Music Entertainment | NYSE Composite vs. SunLink Health Systems | NYSE Composite vs. Getty Realty |
| Fidelity Preferred vs. Fidelity Investment Grade | Fidelity Preferred vs. Fidelity Investment Grade | Fidelity Preferred vs. Fidelity High Yield | Fidelity Preferred vs. Fidelity Corporate Bond |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |