Correlation Between Fidelity Momentum and Fidelity All

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

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

Diversification Opportunities for Fidelity Momentum and Fidelity All

0.97

Correlation Coefficient

Fidelity Momentum  Fidelity All

Almost no diversification

The 3 months correlation between Fidelity and Fidelity is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Momentum ETF and Fidelity All in One Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity All in and Fidelity Momentum 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 Momentum ETF are associated (or correlated) with Fidelity All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity All in has no effect on the direction of Fidelity Momentum i.e., Fidelity Momentum and Fidelity All go up and down completely randomly.

Pair Corralation between Fidelity Momentum and Fidelity All

Assuming the 90 days trading horizon Fidelity Momentum ETF is expected to generate 2.06 times more return on investment than Fidelity All. However, Fidelity Momentum is 2.06 times more volatile than Fidelity All in One Balanced. It trades about 0.38 of its potential returns per unit of risk. Fidelity All in One Balanced is currently generating about 0.31 per unit of risk. If you would invest  1,428  in Fidelity Momentum ETF on September 5, 2024 and sell it today you would earn a total of  330.00  from holding Fidelity Momentum ETF or generate 23.11% return on investment over 90 days.

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

Fidelity Momentum ETF  vs.  Fidelity All in One Balanced

Fidelity Momentum ETF

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Momentum ETF are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Fidelity Momentum exhibited solid returns over the last few months and may actually be approaching a breakup point.

Fidelity All in

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity All in One Balanced are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Fidelity All may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fidelity Momentum and Fidelity All

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

The idea behind Fidelity Momentum ETF and Fidelity All in One Balanced 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.