Correlation Between SPDR ICE and Fidelity Preferred
Can any of the company-specific risk be diversified away by investing in both SPDR ICE 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 SPDR ICE and Fidelity Preferred into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR ICE Preferred and Fidelity Preferred Securities, you can compare the effects of market volatilities on SPDR ICE 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 SPDR ICE with a short position of Fidelity Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR ICE and Fidelity Preferred.
Diversification Opportunities for SPDR ICE and Fidelity Preferred
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and Fidelity is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding SPDR ICE Preferred and Fidelity Preferred Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Preferred and SPDR ICE 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 SPDR ICE Preferred 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 SPDR ICE i.e., SPDR ICE and Fidelity Preferred go up and down completely randomly.
Pair Corralation between SPDR ICE and Fidelity Preferred
Considering the 90-day investment horizon SPDR ICE is expected to generate 1.39 times less return on investment than Fidelity Preferred. In addition to that, SPDR ICE is 2.18 times more volatile than Fidelity Preferred Securities. It trades about 0.04 of its total potential returns per unit of risk. Fidelity Preferred Securities is currently generating about 0.11 per unit of volatility. If you would invest 1,835 in Fidelity Preferred Securities on August 26, 2024 and sell it today you would earn a total of 361.00 from holding Fidelity Preferred Securities or generate 19.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR ICE Preferred vs. Fidelity Preferred Securities
Performance |
| Timeline |
| SPDR ICE Preferred |
| Fidelity Preferred |
SPDR ICE and Fidelity Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR ICE and Fidelity Preferred
The main advantage of trading using opposite SPDR ICE and Fidelity Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR ICE 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.| SPDR ICE vs. VanEck Preferred Securities | SPDR ICE vs. Invesco Preferred ETF | SPDR ICE vs. Invesco Financial Preferred | SPDR ICE vs. Global X SuperIncome |
| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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