Correlation Between SPDR Portfolio and Fidelity Investment
Can any of the company-specific risk be diversified away by investing in both SPDR Portfolio and Fidelity Investment 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 Portfolio and Fidelity Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Portfolio Aggregate and Fidelity Investment Grade, you can compare the effects of market volatilities on SPDR Portfolio and Fidelity Investment 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 Portfolio with a short position of Fidelity Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and Fidelity Investment.
Diversification Opportunities for SPDR Portfolio and Fidelity Investment
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between SPDR and Fidelity is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio Aggregate and Fidelity Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Investment Grade and SPDR Portfolio 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 Portfolio Aggregate are associated (or correlated) with Fidelity Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Investment Grade has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and Fidelity Investment go up and down completely randomly.
Pair Corralation between SPDR Portfolio and Fidelity Investment
Given the investment horizon of 90 days SPDR Portfolio Aggregate is expected to under-perform the Fidelity Investment. But the etf apears to be less risky and, when comparing its historical volatility, SPDR Portfolio Aggregate is 1.28 times less risky than Fidelity Investment. The etf trades about -0.09 of its potential returns per unit of risk. The Fidelity Investment Grade is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 4,312 in Fidelity Investment Grade on August 25, 2024 and sell it today you would lose (25.00) from holding Fidelity Investment Grade or give up 0.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Portfolio Aggregate vs. Fidelity Investment Grade
Performance |
| Timeline |
| SPDR Portfolio Aggregate |
| Fidelity Investment Grade |
SPDR Portfolio and Fidelity Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Portfolio and Fidelity Investment
The main advantage of trading using opposite SPDR Portfolio and Fidelity Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio position performs unexpectedly, Fidelity Investment 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 Investment will offset losses from the drop in Fidelity Investment's long position.| SPDR Portfolio vs. iShares MSCI EAFE | SPDR Portfolio vs. iShares iBoxx Investment | SPDR Portfolio vs. iShares TIPS Bond | SPDR Portfolio vs. iShares 1 3 Year |
| Fidelity Investment vs. iShares MSCI EAFE | Fidelity Investment vs. iShares iBoxx Investment | Fidelity Investment vs. iShares TIPS Bond | Fidelity Investment vs. iShares 1 3 Year |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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