Correlation Between Fidelity New and Fidelity Series

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

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

Diversification Opportunities for Fidelity New and Fidelity Series

-0.49

Correlation Coefficient

Fidelity New  Fidelity Series

Very good diversification

The 3 months correlation between Fidelity and Fidelity is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity New Markets and Fidelity Series Blue in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Series Blue and Fidelity New 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 New Markets are associated (or correlated) with Fidelity Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Series Blue has no effect on the direction of Fidelity New i.e., Fidelity New and Fidelity Series go up and down completely randomly.

Pair Corralation between Fidelity New and Fidelity Series

Assuming the 90 days horizon Fidelity New Markets is expected to generate 0.18 times more return on investment than Fidelity Series. However, Fidelity New Markets is 5.55 times less risky than Fidelity Series. It trades about 0.2 of its potential returns per unit of risk. Fidelity Series Blue is currently generating about -0.12 per unit of risk. If you would invest  1,251  in Fidelity New Markets on December 22, 2024 and sell it today you would earn a total of  44.00  from holding Fidelity New Markets or generate 3.52% return on investment over 90 days.

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

Fidelity New Markets  vs.  Fidelity Series Blue

Fidelity New Markets

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity New Markets are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Fidelity New is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Series Blue

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Series Blue 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 fundamental 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 New and Fidelity Series

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

The idea behind Fidelity New Markets and Fidelity Series Blue 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.