Correlation Between Fidelity Balanced and Fidelity Puritan

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

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

Diversification Opportunities for Fidelity Balanced and Fidelity Puritan

0.99

Correlation Coefficient

Fidelity Balanced  Fidelity Puritan

No risk reduction

The 3 months correlation between Fidelity and Fidelity is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Balanced Fund and Fidelity Puritan Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Puritan and Fidelity Balanced 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 Balanced Fund are associated (or correlated) with Fidelity Puritan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Puritan has no effect on the direction of Fidelity Balanced i.e., Fidelity Balanced and Fidelity Puritan go up and down completely randomly.

Pair Corralation between Fidelity Balanced and Fidelity Puritan

Assuming the 90 days horizon Fidelity Balanced Fund is expected to generate 0.87 times more return on investment than Fidelity Puritan. However, Fidelity Balanced Fund is 1.15 times less risky than Fidelity Puritan. It trades about -0.39 of its potential returns per unit of risk. Fidelity Puritan Fund is currently generating about -0.35 per unit of risk. If you would invest  3,101  in Fidelity Balanced Fund on October 5, 2024 and sell it today you would lose (145.00) from holding Fidelity Balanced Fund or give up 4.68% of portfolio value over 90 days.

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

Fidelity Balanced Fund  vs.  Fidelity Puritan Fund

Fidelity Balanced

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Balanced Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Fidelity Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Puritan

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Puritan Fund are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Puritan 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 Balanced and Fidelity Puritan

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

The idea behind Fidelity Balanced Fund and Fidelity Puritan Fund 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.