Correlation Between CI Signature and Fidelity Technology

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

By analyzing existing cross correlation between CI Signature Cat and Fidelity Technology Innovators, you can compare the effects of market volatilities on CI Signature and Fidelity Technology 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 CI Signature with a short position of Fidelity Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Signature and Fidelity Technology.

Diversification Opportunities for CI Signature and Fidelity Technology

0.9

Correlation Coefficient

CI Signature  Fidelity Technology

Almost no diversification

The 3 months correlation between 0P0001AAKP and Fidelity is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding CI Signature Cat and Fidelity Technology Innovators in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Technology and CI Signature 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 CI Signature Cat are associated (or correlated) with Fidelity Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Technology has no effect on the direction of CI Signature i.e., CI Signature and Fidelity Technology go up and down completely randomly.

Pair Corralation between CI Signature and Fidelity Technology

Assuming the 90 days trading horizon CI Signature Cat is expected to generate 1.72 times more return on investment than Fidelity Technology. However, CI Signature is 1.72 times more volatile than Fidelity Technology Innovators. It trades about 0.27 of its potential returns per unit of risk. Fidelity Technology Innovators is currently generating about 0.18 per unit of risk. If you would invest  2,973  in CI Signature Cat on August 31, 2024 and sell it today you would earn a total of  702.00  from holding CI Signature Cat or generate 23.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

CI Signature Cat  vs.  Fidelity Technology Innovators

CI Signature Cat

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CI Signature Cat are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, CI Signature sustained solid returns over the last few months and may actually be approaching a breakup point.

Fidelity Technology

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Technology Innovators are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat unfluctuating basic indicators, Fidelity Technology may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with CI Signature and Fidelity Technology

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

The idea behind CI Signature Cat and Fidelity Technology Innovators 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.