Correlation Between Wilmington Intermediate-ter and Fidelity Capital

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

By analyzing existing cross correlation between Wilmington Intermediate Term Bond and Fidelity Capital Income, you can compare the effects of market volatilities on Wilmington Intermediate-ter and Fidelity Capital 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 Wilmington Intermediate-ter with a short position of Fidelity Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wilmington Intermediate-ter and Fidelity Capital.

Diversification Opportunities for Wilmington Intermediate-ter and Fidelity Capital

-0.21

Correlation Coefficient

Wilmington Intermediate-ter  Fidelity Capital

Very good diversification

The 3 months correlation between Wilmington and Fidelity is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Wilmington Intermediate Term B and Fidelity Capital Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Capital Income and Wilmington Intermediate-ter 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 Wilmington Intermediate Term Bond are associated (or correlated) with Fidelity Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Capital Income has no effect on the direction of Wilmington Intermediate-ter i.e., Wilmington Intermediate-ter and Fidelity Capital go up and down completely randomly.

Pair Corralation between Wilmington Intermediate-ter and Fidelity Capital

Assuming the 90 days horizon Wilmington Intermediate-ter is expected to generate 1.42 times less return on investment than Fidelity Capital. In addition to that, Wilmington Intermediate-ter is 2.27 times more volatile than Fidelity Capital Income. It trades about 0.04 of its total potential returns per unit of risk. Fidelity Capital Income is currently generating about 0.11 per unit of volatility. If you would invest  845.00  in Fidelity Capital Income on October 4, 2024 and sell it today you would earn a total of  170.00  from holding Fidelity Capital Income or generate 20.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	82.83%
Values	Daily Returns

Wilmington Intermediate Term B  vs.  Fidelity Capital Income

Wilmington Intermediate-ter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wilmington Intermediate Term Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Fidelity Capital Income

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Capital Income are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Fidelity Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Wilmington Intermediate-ter and Fidelity Capital

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

The idea behind Wilmington Intermediate Term Bond and Fidelity Capital Income 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.