Correlation Between Allete and Fidelity Telecom

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

By analyzing existing cross correlation between Allete Inc and Fidelity Telecom And, you can compare the effects of market volatilities on Allete and Fidelity Telecom 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 Allete with a short position of Fidelity Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allete and Fidelity Telecom.

Diversification Opportunities for Allete and Fidelity Telecom

0.59

Correlation Coefficient

Allete  Fidelity Telecom

Very weak diversification

The 3 months correlation between Allete and Fidelity is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Allete Inc and Fidelity Telecom And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Telecom And and Allete 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 Allete Inc are associated (or correlated) with Fidelity Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Telecom And has no effect on the direction of Allete i.e., Allete and Fidelity Telecom go up and down completely randomly.

Pair Corralation between Allete and Fidelity Telecom

Considering the 90-day investment horizon Allete is expected to generate 1.55 times less return on investment than Fidelity Telecom. But when comparing it to its historical volatility, Allete Inc is 3.25 times less risky than Fidelity Telecom. It trades about 0.17 of its potential returns per unit of risk. Fidelity Telecom And is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,287  in Fidelity Telecom And on December 28, 2024 and sell it today you would earn a total of  138.00  from holding Fidelity Telecom And or generate 4.2% return on investment over 90 days.

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

Allete Inc  vs.  Fidelity Telecom And

Allete Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allete Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Allete is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Fidelity Telecom And

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Telecom And are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Fidelity Telecom is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Allete and Fidelity Telecom

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

The idea behind Allete Inc and Fidelity Telecom And 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..