Correlation Between Fidelity Convertible and Loomis Sayles

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

Diversification Opportunities for Fidelity Convertible and Loomis Sayles

0.86

Correlation Coefficient

Fidelity Convertible  Loomis Sayles

Very poor diversification

The 3 months correlation between Fidelity and Loomis is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Vertible Securities and Loomis Sayles Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loomis Sayles Small 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 Loomis Sayles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loomis Sayles Small has no effect on the direction of Fidelity Convertible i.e., Fidelity Convertible and Loomis Sayles go up and down completely randomly.

Pair Corralation between Fidelity Convertible and Loomis Sayles

Assuming the 90 days horizon Fidelity Vertible Securities is expected to generate 0.71 times more return on investment than Loomis Sayles. However, Fidelity Vertible Securities is 1.4 times less risky than Loomis Sayles. It trades about -0.14 of its potential returns per unit of risk. Loomis Sayles Small is currently generating about -0.15 per unit of risk. If you would invest  3,630  in Fidelity Vertible Securities on December 20, 2024 and sell it today you would lose (295.00) from holding Fidelity Vertible Securities or give up 8.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Fidelity Vertible Securities  vs.  Loomis Sayles Small

Fidelity Convertible

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Vertible Securities has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Loomis Sayles Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Loomis Sayles Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Fidelity Convertible and Loomis Sayles

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

The idea behind Fidelity Vertible Securities and Loomis Sayles Small 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.