Correlation Between Fidelity Convertible and Forum Funds

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

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

Diversification Opportunities for Fidelity Convertible and Forum Funds

0.88

Correlation Coefficient

Fidelity Convertible  Forum Funds

Very poor diversification

The 3 months correlation between Fidelity and Forum is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Vertible Securities and Forum Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forum Funds and Fidelity Convertible 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 Vertible Securities are associated (or correlated) with Forum Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forum Funds has no effect on the direction of Fidelity Convertible i.e., Fidelity Convertible and Forum Funds go up and down completely randomly.

Pair Corralation between Fidelity Convertible and Forum Funds

Assuming the 90 days horizon Fidelity Vertible Securities is expected to under-perform the Forum Funds. In addition to that, Fidelity Convertible is 2.97 times more volatile than Forum Funds . It trades about -0.25 of its total potential returns per unit of risk. Forum Funds is currently generating about -0.27 per unit of volatility. If you would invest  1,061  in Forum Funds on October 8, 2024 and sell it today you would lose (27.00) from holding Forum Funds or give up 2.54% of portfolio value over 90 days.

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

Fidelity Vertible Securities  vs.  Forum Funds

Fidelity Convertible

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Vertible Securities 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 Convertible is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Forum Funds

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forum Funds has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Forum Funds 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 Convertible and Forum Funds

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

The idea behind Fidelity Vertible Securities and Forum Funds 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.