Correlation Between American Funds and Fidelity Managed
Can any of the company-specific risk be diversified away by investing in both American Funds and Fidelity Managed 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 American Funds and Fidelity Managed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Retirement and Fidelity Managed Retirement, you can compare the effects of market volatilities on American Funds and Fidelity Managed 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 American Funds with a short position of Fidelity Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Fidelity Managed.
Diversification Opportunities for American Funds and Fidelity Managed
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Fidelity is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Retirement and Fidelity Managed Retirement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Managed Ret and American Funds 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 American Funds Retirement are associated (or correlated) with Fidelity Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Managed Ret has no effect on the direction of American Funds i.e., American Funds and Fidelity Managed go up and down completely randomly.
Pair Corralation between American Funds and Fidelity Managed
Assuming the 90 days horizon American Funds Retirement is expected to generate 1.06 times more return on investment than Fidelity Managed. However, American Funds is 1.06 times more volatile than Fidelity Managed Retirement. It trades about 0.14 of its potential returns per unit of risk. Fidelity Managed Retirement is currently generating about 0.12 per unit of risk. If you would invest 1,113 in American Funds Retirement on August 29, 2024 and sell it today you would earn a total of 166.00 from holding American Funds Retirement or generate 14.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
American Funds Retirement vs. Fidelity Managed Retirement
Performance |
| Timeline |
| American Funds Retirement |
| Fidelity Managed Ret |
American Funds and Fidelity Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Fidelity Managed
The main advantage of trading using opposite American Funds and Fidelity Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Fidelity Managed 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 Managed will offset losses from the drop in Fidelity Managed's long position.| American Funds vs. Shelton Funds | American Funds vs. Volumetric Fund Volumetric | American Funds vs. Ab Value Fund | American Funds vs. T Rowe Price |
| Fidelity Managed vs. Fidelity Freedom Index | Fidelity Managed vs. Fidelity Freedom Index | Fidelity Managed vs. Fidelity Freedom Index | Fidelity Managed vs. ABIVAX Socit Anonyme |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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