Correlation Between Pace High and Fidelity Capital
Can any of the company-specific risk be diversified away by investing in both Pace High and Fidelity Capital 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 Pace High and Fidelity Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace High Yield and Fidelity Capital Income, you can compare the effects of market volatilities on Pace High and Fidelity Capital 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 Pace High with a short position of Fidelity Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace High and Fidelity Capital.
Diversification Opportunities for Pace High and Fidelity Capital
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between PACE and Fidelity is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Pace High Yield and Fidelity Capital Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Capital Income and Pace High 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 Pace High Yield are associated (or correlated) with Fidelity Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Capital Income has no effect on the direction of Pace High i.e., Pace High and Fidelity Capital go up and down completely randomly.
Pair Corralation between Pace High and Fidelity Capital
Assuming the 90 days horizon Pace High is expected to generate 6.78 times less return on investment than Fidelity Capital. But when comparing it to its historical volatility, Pace High Yield is 1.65 times less risky than Fidelity Capital. It trades about 0.07 of its potential returns per unit of risk. Fidelity Capital Income is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,018 in Fidelity Capital Income on August 28, 2024 and sell it today you would earn a total of 16.00 from holding Fidelity Capital Income or generate 1.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace High Yield vs. Fidelity Capital Income
Performance |
| Timeline |
| Pace High Yield |
| Fidelity Capital Income |
Pace High and Fidelity Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace High and Fidelity Capital
The main advantage of trading using opposite Pace High and Fidelity Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace High position performs unexpectedly, Fidelity Capital 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 Capital will offset losses from the drop in Fidelity Capital's long position.| Pace High vs. Pace Smallmedium Value | Pace High vs. Pace International Equity | Pace High vs. Pace International Equity | Pace High vs. Ubs Allocation Fund |
| Fidelity Capital vs. Fidelity High Income | Fidelity Capital vs. Fidelity New Markets | Fidelity Capital vs. Fidelity Total Bond | Fidelity Capital vs. Fidelity Balanced Fund |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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