Correlation Between SPDR Portfolio and Fidelity Fundamental
Can any of the company-specific risk be diversified away by investing in both SPDR Portfolio and Fidelity Fundamental 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 Fundamental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Portfolio SP and Fidelity Fundamental Large, you can compare the effects of market volatilities on SPDR Portfolio and Fidelity Fundamental 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 Fundamental. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and Fidelity Fundamental.
Diversification Opportunities for SPDR Portfolio and Fidelity Fundamental
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 SP and Fidelity Fundamental Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Fundamental 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 SP are associated (or correlated) with Fidelity Fundamental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Fundamental has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and Fidelity Fundamental go up and down completely randomly.
Pair Corralation between SPDR Portfolio and Fidelity Fundamental
Given the investment horizon of 90 days SPDR Portfolio is expected to generate 1.1 times less return on investment than Fidelity Fundamental. But when comparing it to its historical volatility, SPDR Portfolio SP is 1.06 times less risky than Fidelity Fundamental. It trades about 0.12 of its potential returns per unit of risk. Fidelity Fundamental Large is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,889 in Fidelity Fundamental Large on August 30, 2024 and sell it today you would earn a total of 1,846 from holding Fidelity Fundamental Large or generate 63.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Portfolio SP vs. Fidelity Fundamental Large
Performance |
| Timeline |
| SPDR Portfolio SP |
| Fidelity Fundamental |
SPDR Portfolio and Fidelity Fundamental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Portfolio and Fidelity Fundamental
The main advantage of trading using opposite SPDR Portfolio and Fidelity Fundamental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio position performs unexpectedly, Fidelity Fundamental 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 Fundamental will offset losses from the drop in Fidelity Fundamental's long position.| SPDR Portfolio vs. SPDR Portfolio SP | SPDR Portfolio vs. Invesco NASDAQ 100 | SPDR Portfolio vs. SPDR Portfolio SP | SPDR Portfolio vs. SPDR Portfolio SP |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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