Correlation Between SPDR SP and Fidelity Fundamental
Can any of the company-specific risk be diversified away by investing in both SPDR SP 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 SP 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 SP 500 and Fidelity Fundamental Large, you can compare the effects of market volatilities on SPDR SP 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 SP with a short position of Fidelity Fundamental. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Fidelity Fundamental.
Diversification Opportunities for SPDR SP 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 SP 500 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 SP 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 SP 500 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 SP i.e., SPDR SP and Fidelity Fundamental go up and down completely randomly.
Pair Corralation between SPDR SP and Fidelity Fundamental
Considering the 90-day investment horizon SPDR SP is expected to generate 1.11 times less return on investment than Fidelity Fundamental. But when comparing it to its historical volatility, SPDR SP 500 is 1.06 times less risky than Fidelity Fundamental. It trades about 0.11 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 2,934 in Fidelity Fundamental Large on August 26, 2024 and sell it today you would earn a total of 1,790 from holding Fidelity Fundamental Large or generate 61.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. Fidelity Fundamental Large
Performance |
| Timeline |
| SPDR SP 500 |
| Fidelity Fundamental |
SPDR SP and Fidelity Fundamental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Fidelity Fundamental
The main advantage of trading using opposite SPDR SP and Fidelity Fundamental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP 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 SP vs. FT Vest Equity | SPDR SP vs. Northern Lights | SPDR SP vs. Dimensional International High | SPDR SP vs. First Trust Exchange Traded |
| Fidelity Fundamental vs. FT Vest Equity | Fidelity Fundamental vs. Northern Lights | Fidelity Fundamental vs. Dimensional International High | Fidelity Fundamental vs. First Trust Exchange Traded |
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 CEOs Directory module to screen CEOs from public companies around the world.
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