Correlation Between Fidelity Capital and Balanced Fund

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

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

Diversification Opportunities for Fidelity Capital and Balanced Fund

0.94

Correlation Coefficient

Fidelity Capital  Balanced Fund

Almost no diversification

The 3 months correlation between Fidelity and Balanced is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Capital Income and Balanced Fund Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balanced Fund Instit and Fidelity Capital 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 Fidelity Capital Income are associated (or correlated) with Balanced Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balanced Fund Instit has no effect on the direction of Fidelity Capital i.e., Fidelity Capital and Balanced Fund go up and down completely randomly.

Pair Corralation between Fidelity Capital and Balanced Fund

Assuming the 90 days horizon Fidelity Capital Income is expected to generate 0.57 times more return on investment than Balanced Fund. However, Fidelity Capital Income is 1.76 times less risky than Balanced Fund. It trades about 0.34 of its potential returns per unit of risk. Balanced Fund Institutional is currently generating about 0.16 per unit of risk. If you would invest  988.00  in Fidelity Capital Income on September 12, 2024 and sell it today you would earn a total of  50.00  from holding Fidelity Capital Income or generate 5.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Fidelity Capital Income  vs.  Balanced Fund Institutional

Fidelity Capital Income

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Capital Income are ranked lower than 26 (%) 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.

Balanced Fund Instit

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Balanced Fund Institutional are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Balanced Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fidelity Capital and Balanced Fund

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

The idea behind Fidelity Capital Income and Balanced Fund Institutional 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.