Correlation Between Fidelity ClearPath and Tangerine Balanced

Can any of the company-specific risk be diversified away by investing in both Fidelity ClearPath and Tangerine Balanced 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 Fidelity ClearPath and Tangerine Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fidelity ClearPath 2045 and Tangerine Balanced Growth, you can compare the effects of market volatilities on Fidelity ClearPath and Tangerine Balanced 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 Fidelity ClearPath with a short position of Tangerine Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity ClearPath and Tangerine Balanced.

Diversification Opportunities for Fidelity ClearPath and Tangerine Balanced

0.71

Correlation Coefficient

Fidelity ClearPath  Tangerine Balanced

Poor diversification

The 3 months correlation between Fidelity and Tangerine is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity ClearPath 2045 and Tangerine Balanced Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tangerine Balanced Growth and Fidelity ClearPath 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 Fidelity ClearPath 2045 are associated (or correlated) with Tangerine Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tangerine Balanced Growth has no effect on the direction of Fidelity ClearPath i.e., Fidelity ClearPath and Tangerine Balanced go up and down completely randomly.

Pair Corralation between Fidelity ClearPath and Tangerine Balanced

Assuming the 90 days trading horizon Fidelity ClearPath 2045 is expected to under-perform the Tangerine Balanced. In addition to that, Fidelity ClearPath is 2.65 times more volatile than Tangerine Balanced Growth. It trades about -0.32 of its total potential returns per unit of risk. Tangerine Balanced Growth is currently generating about -0.32 per unit of volatility. If you would invest  2,301  in Tangerine Balanced Growth on October 5, 2024 and sell it today you would lose (75.00) from holding Tangerine Balanced Growth or give up 3.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Fidelity ClearPath 2045  vs.  Tangerine Balanced Growth

Fidelity ClearPath 2045

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity ClearPath 2045 has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Fidelity ClearPath is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tangerine Balanced Growth

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tangerine Balanced Growth are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, Tangerine Balanced is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fidelity ClearPath and Tangerine Balanced

The main advantage of trading using opposite Fidelity ClearPath and Tangerine Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity ClearPath position performs unexpectedly, Tangerine Balanced 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 Tangerine Balanced will offset losses from the drop in Tangerine Balanced's long position.

The idea behind Fidelity ClearPath 2045 and Tangerine Balanced Growth pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.