Correlation Between Government Securities and Fidelity Salem
Can any of the company-specific risk be diversified away by investing in both Government Securities and Fidelity Salem 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 Government Securities and Fidelity Salem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Government Securities Fund and Fidelity Salem Street, you can compare the effects of market volatilities on Government Securities and Fidelity Salem 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 Government Securities with a short position of Fidelity Salem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Government Securities and Fidelity Salem.
Diversification Opportunities for Government Securities and Fidelity Salem
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Government and Fidelity is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Government Securities Fund and Fidelity Salem Street in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Salem Street and Government Securities 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 Government Securities Fund are associated (or correlated) with Fidelity Salem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Salem Street has no effect on the direction of Government Securities i.e., Government Securities and Fidelity Salem go up and down completely randomly.
Pair Corralation between Government Securities and Fidelity Salem
Assuming the 90 days horizon Government Securities is expected to generate 1.82 times less return on investment than Fidelity Salem. In addition to that, Government Securities is 1.44 times more volatile than Fidelity Salem Street. It trades about 0.12 of its total potential returns per unit of risk. Fidelity Salem Street is currently generating about 0.31 per unit of volatility. If you would invest 1,062 in Fidelity Salem Street on September 4, 2024 and sell it today you would earn a total of 14.00 from holding Fidelity Salem Street or generate 1.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Government Securities Fund vs. Fidelity Salem Street
Performance |
| Timeline |
| Government Securities |
| Fidelity Salem Street |
Government Securities and Fidelity Salem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Government Securities and Fidelity Salem
The main advantage of trading using opposite Government Securities and Fidelity Salem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Government Securities position performs unexpectedly, Fidelity Salem 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 Salem will offset losses from the drop in Fidelity Salem's long position.| Government Securities vs. T Rowe Price | Government Securities vs. Versatile Bond Portfolio | Government Securities vs. Multisector Bond Sma | Government Securities vs. Gmo High Yield |
| Fidelity Salem vs. Bbh Intermediate Municipal | Fidelity Salem vs. Gamco Global Telecommunications | Fidelity Salem vs. Ab Impact Municipal | Fidelity Salem vs. Vanguard California Long Term |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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