Correlation Between First Trust and Fidelity Dynamic

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

By analyzing existing cross correlation between First Trust Exchange Traded and Fidelity Dynamic Buffered, you can compare the effects of market volatilities on First Trust and Fidelity Dynamic 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 First Trust with a short position of Fidelity Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Fidelity Dynamic.

Diversification Opportunities for First Trust and Fidelity Dynamic

0.78

Correlation Coefficient

First Trust  Fidelity Dynamic

Poor diversification

The 3 months correlation between First and Fidelity is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and Fidelity Dynamic Buffered in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Dynamic Buffered and First Trust 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 First Trust Exchange Traded are associated (or correlated) with Fidelity Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Dynamic Buffered has no effect on the direction of First Trust i.e., First Trust and Fidelity Dynamic go up and down completely randomly.

Pair Corralation between First Trust and Fidelity Dynamic

Given the investment horizon of 90 days First Trust is expected to generate 1.46 times less return on investment than Fidelity Dynamic. But when comparing it to its historical volatility, First Trust Exchange Traded is 3.52 times less risky than Fidelity Dynamic. It trades about 0.28 of its potential returns per unit of risk. Fidelity Dynamic Buffered is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,669  in Fidelity Dynamic Buffered on October 25, 2024 and sell it today you would earn a total of  111.00  from holding Fidelity Dynamic Buffered or generate 4.16% return on investment over 90 days.

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

First Trust Exchange Traded  vs.  Fidelity Dynamic Buffered

First Trust Exchange

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Exchange Traded are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, First Trust is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Fidelity Dynamic Buffered

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Dynamic Buffered are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Fidelity Dynamic is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with First Trust and Fidelity Dynamic

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

The idea behind First Trust Exchange Traded and Fidelity Dynamic Buffered 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.