Correlation Between Absolute Core and Fidelity Blue

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

By analyzing existing cross correlation between Absolute Core Strategy and Fidelity Blue Chip, you can compare the effects of market volatilities on Absolute Core and Fidelity Blue 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 Absolute Core with a short position of Fidelity Blue. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Core and Fidelity Blue.

Diversification Opportunities for Absolute Core and Fidelity Blue

0.39

Correlation Coefficient

Absolute Core  Fidelity Blue

Weak diversification

The 3 months correlation between Absolute and Fidelity is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Core Strategy and Fidelity Blue Chip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Blue Chip and Absolute Core 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 Absolute Core Strategy are associated (or correlated) with Fidelity Blue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Blue Chip has no effect on the direction of Absolute Core i.e., Absolute Core and Fidelity Blue go up and down completely randomly.

Pair Corralation between Absolute Core and Fidelity Blue

Given the investment horizon of 90 days Absolute Core Strategy is expected to under-perform the Fidelity Blue. But the etf apears to be less risky and, when comparing its historical volatility, Absolute Core Strategy is 1.98 times less risky than Fidelity Blue. The etf trades about -0.01 of its potential returns per unit of risk. The Fidelity Blue Chip is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  4,132  in Fidelity Blue Chip on September 15, 2024 and sell it today you would earn a total of  642.00  from holding Fidelity Blue Chip or generate 15.54% return on investment over 90 days.

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

Absolute Core Strategy  vs.  Fidelity Blue Chip

Absolute Core Strategy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Absolute Core Strategy has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Absolute Core is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Fidelity Blue Chip

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Blue Chip are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Fidelity Blue reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Absolute Core and Fidelity Blue

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

The idea behind Absolute Core Strategy and Fidelity Blue Chip 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..