Correlation Between Computers Portfolio and Fidelity Select

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

By analyzing existing cross correlation between Computers Portfolio Puters and Fidelity Select Semiconductors, you can compare the effects of market volatilities on Computers Portfolio and Fidelity Select 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 Computers Portfolio with a short position of Fidelity Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Computers Portfolio and Fidelity Select.

Diversification Opportunities for Computers Portfolio and Fidelity Select

0.71

Correlation Coefficient

Computers Portfolio  Fidelity Select

Poor diversification

The 3 months correlation between Computers and Fidelity is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Computers Portfolio Puters and Fidelity Select Semiconductors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Select Semi and Computers Portfolio 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 Computers Portfolio Puters are associated (or correlated) with Fidelity Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Select Semi has no effect on the direction of Computers Portfolio i.e., Computers Portfolio and Fidelity Select go up and down completely randomly.

Pair Corralation between Computers Portfolio and Fidelity Select

Assuming the 90 days horizon Computers Portfolio Puters is expected to generate 0.51 times more return on investment than Fidelity Select. However, Computers Portfolio Puters is 1.95 times less risky than Fidelity Select. It trades about -0.02 of its potential returns per unit of risk. Fidelity Select Semiconductors is currently generating about -0.1 per unit of risk. If you would invest  10,791  in Computers Portfolio Puters on December 31, 2024 and sell it today you would lose (289.00) from holding Computers Portfolio Puters or give up 2.68% of portfolio value over 90 days.

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

Computers Portfolio Puters  vs.  Fidelity Select Semiconductors

Computers Portfolio

Risk-Adjusted Performance

Very Weak

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

Fidelity Select Semi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Select Semiconductors 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 essential indicators remain fairly strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Computers Portfolio and Fidelity Select

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

The idea behind Computers Portfolio Puters and Fidelity Select Semiconductors 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.