Correlation Between Fidelity Momentum and Fidelity Blue

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

By analyzing existing cross correlation between Fidelity Momentum Factor and Fidelity Blue Chip, you can compare the effects of market volatilities on Fidelity Momentum and Fidelity Blue 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 Blue. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Momentum and Fidelity Blue.

Diversification Opportunities for Fidelity Momentum and Fidelity Blue

0.94

Correlation Coefficient

Fidelity Momentum  Fidelity Blue

Almost no diversification

The 3 months correlation between Fidelity and Fidelity is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Momentum Factor and Fidelity Blue Chip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Blue Chip 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 Factor are associated (or correlated) with Fidelity Blue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Blue Chip has no effect on the direction of Fidelity Momentum i.e., Fidelity Momentum and Fidelity Blue go up and down completely randomly.

Pair Corralation between Fidelity Momentum and Fidelity Blue

Given the investment horizon of 90 days Fidelity Momentum Factor is expected to under-perform the Fidelity Blue. But the etf apears to be less risky and, when comparing its historical volatility, Fidelity Momentum Factor is 1.12 times less risky than Fidelity Blue. The etf trades about -0.01 of its potential returns per unit of risk. The Fidelity Blue Chip is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,780  in Fidelity Blue Chip on October 9, 2024 and sell it today you would earn a total of  39.00  from holding Fidelity Blue Chip or generate 0.82% return on investment over 90 days.

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

Fidelity Momentum Factor  vs.  Fidelity Blue Chip

Fidelity Momentum Factor

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Momentum Factor are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile primary indicators, Fidelity Momentum may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Fidelity Blue Chip

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Blue Chip are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal fundamental indicators, Fidelity Blue may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Fidelity Momentum and Fidelity Blue

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

The idea behind Fidelity Momentum Factor and Fidelity Blue Chip 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 CEOs Directory module to screen CEOs from public companies around the world.