Correlation Between Fidelity Focused and Pacific Capital

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

By analyzing existing cross correlation between Fidelity Focused High and Pacific Capital Tax Free, you can compare the effects of market volatilities on Fidelity Focused and Pacific Capital 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 Focused with a short position of Pacific Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Focused and Pacific Capital.

Diversification Opportunities for Fidelity Focused and Pacific Capital

0.68

Correlation Coefficient

Fidelity Focused  Pacific Capital

Poor diversification

The 3 months correlation between Fidelity and Pacific is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Focused High and Pacific Capital Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Capital Tax and Fidelity Focused 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 Focused High are associated (or correlated) with Pacific Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Capital Tax has no effect on the direction of Fidelity Focused i.e., Fidelity Focused and Pacific Capital go up and down completely randomly.

Pair Corralation between Fidelity Focused and Pacific Capital

Assuming the 90 days horizon Fidelity Focused High is expected to under-perform the Pacific Capital. In addition to that, Fidelity Focused is 1.07 times more volatile than Pacific Capital Tax Free. It trades about -0.3 of its total potential returns per unit of risk. Pacific Capital Tax Free is currently generating about -0.3 per unit of volatility. If you would invest  979.00  in Pacific Capital Tax Free on October 12, 2024 and sell it today you would lose (10.00) from holding Pacific Capital Tax Free or give up 1.02% of portfolio value over 90 days.

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

Fidelity Focused High  vs.  Pacific Capital Tax Free

Fidelity Focused High

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pacific Capital Tax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pacific Capital Tax Free has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Pacific Capital 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 Focused and Pacific Capital

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

The idea behind Fidelity Focused High and Pacific Capital Tax Free 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.