Correlation Between Morningstar Aggressive and Fidelity Series

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

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

Diversification Opportunities for Morningstar Aggressive and Fidelity Series

0.38

Correlation Coefficient

Morningstar Aggressive  Fidelity Series

Weak diversification

The 3 months correlation between Morningstar and Fidelity is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Morningstar Aggressive Growth and Fidelity Series Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Series Total and Morningstar Aggressive 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 Morningstar Aggressive Growth are associated (or correlated) with Fidelity Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Series Total has no effect on the direction of Morningstar Aggressive i.e., Morningstar Aggressive and Fidelity Series go up and down completely randomly.

Pair Corralation between Morningstar Aggressive and Fidelity Series

Assuming the 90 days horizon Morningstar Aggressive Growth is expected to under-perform the Fidelity Series. But the mutual fund apears to be less risky and, when comparing its historical volatility, Morningstar Aggressive Growth is 1.01 times less risky than Fidelity Series. The mutual fund trades about -0.2 of its potential returns per unit of risk. The Fidelity Series Total is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,975  in Fidelity Series Total on September 27, 2024 and sell it today you would lose (6.00) from holding Fidelity Series Total or give up 0.3% of portfolio value over 90 days.

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

Morningstar Aggressive Growth  vs.  Fidelity Series Total

Morningstar Aggressive

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morningstar Aggressive Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Morningstar Aggressive is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Series Total

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Series Total are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Fidelity Series is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Morningstar Aggressive and Fidelity Series

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

The idea behind Morningstar Aggressive Growth and Fidelity Series Total 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.