Correlation Between Fidelity All and Fidelity Low

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

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

Diversification Opportunities for Fidelity All and Fidelity Low

0.94

Correlation Coefficient

Fidelity All  Fidelity Low

Almost no diversification

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

Pair Corralation between Fidelity All and Fidelity Low

Assuming the 90 days trading horizon Fidelity All is expected to generate 1.13 times less return on investment than Fidelity Low. But when comparing it to its historical volatility, Fidelity All in One Balanced is 1.28 times less risky than Fidelity Low. It trades about 0.15 of its potential returns per unit of risk. Fidelity Low Volatility is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,760  in Fidelity Low Volatility on September 28, 2024 and sell it today you would earn a total of  1,518  from holding Fidelity Low Volatility or generate 40.37% return on investment over 90 days.

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

Fidelity All in One Balanced  vs.  Fidelity Low Volatility

Fidelity All in

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity All in One Balanced are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Fidelity All is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Fidelity Low Volatility

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Low Volatility are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Fidelity Low may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fidelity All and Fidelity Low

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

The idea behind Fidelity All in One Balanced and Fidelity Low Volatility 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.