Correlation Between Fidelity California and Fidelity Short

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

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

Diversification Opportunities for Fidelity California and Fidelity Short

0.64

Correlation Coefficient

Fidelity California  Fidelity Short

Poor diversification

The 3 months correlation between Fidelity and Fidelity is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity California Limited and Fidelity Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Short Duration and Fidelity California 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 California Limited are associated (or correlated) with Fidelity Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Short Duration has no effect on the direction of Fidelity California i.e., Fidelity California and Fidelity Short go up and down completely randomly.

Pair Corralation between Fidelity California and Fidelity Short

Assuming the 90 days horizon Fidelity California is expected to generate 3.53 times less return on investment than Fidelity Short. But when comparing it to its historical volatility, Fidelity California Limited is 1.69 times less risky than Fidelity Short. It trades about 0.06 of its potential returns per unit of risk. Fidelity Short Duration is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  784.00  in Fidelity Short Duration on October 9, 2024 and sell it today you would earn a total of  115.00  from holding Fidelity Short Duration or generate 14.67% return on investment over 90 days.

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

Fidelity California Limited  vs.  Fidelity Short Duration

Fidelity California

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fidelity Short Duration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Short Duration has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical indicators, Fidelity Short 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 California and Fidelity Short

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

The idea behind Fidelity California Limited and Fidelity Short Duration 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.