Correlation Between Fidelity Momentum and Fidelity Sustainable

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Can any of the company-specific risk be diversified away by investing in both Fidelity Momentum and Fidelity Sustainable 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 Sustainable 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 Sustainable World, you can compare the effects of market volatilities on Fidelity Momentum and Fidelity Sustainable 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 Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Momentum and Fidelity Sustainable.

Diversification Opportunities for Fidelity Momentum and Fidelity Sustainable

0.97
  Correlation Coefficient

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 Sustainable World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Sustainable 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 Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Sustainable has no effect on the direction of Fidelity Momentum i.e., Fidelity Momentum and Fidelity Sustainable go up and down completely randomly.

Pair Corralation between Fidelity Momentum and Fidelity Sustainable

Assuming the 90 days trading horizon Fidelity Momentum ETF is expected to generate 1.4 times more return on investment than Fidelity Sustainable. However, Fidelity Momentum is 1.4 times more volatile than Fidelity Sustainable World. It trades about 0.38 of its potential returns per unit of risk. Fidelity Sustainable World is currently generating about 0.3 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 Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Fidelity Momentum ETF  vs.  Fidelity Sustainable World

 Performance 
       Timeline  
Fidelity Momentum ETF 

Risk-Adjusted Performance

29 of 100

 
Weak
 
Strong
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 Sustainable 

Risk-Adjusted Performance

23 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Sustainable World are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Fidelity Sustainable may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fidelity Momentum and Fidelity Sustainable Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fidelity Momentum and Fidelity Sustainable

The main advantage of trading using opposite Fidelity Momentum and Fidelity Sustainable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Momentum position performs unexpectedly, Fidelity Sustainable 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 Sustainable will offset losses from the drop in Fidelity Sustainable's long position.
The idea behind Fidelity Momentum ETF and Fidelity Sustainable World 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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