Correlation Between Fidelity Managed and Timothy Fixed

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

By analyzing existing cross correlation between Fidelity Managed Retirement and Timothy Fixed Income, you can compare the effects of market volatilities on Fidelity Managed and Timothy Fixed 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 Managed with a short position of Timothy Fixed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Managed and Timothy Fixed.

Diversification Opportunities for Fidelity Managed and Timothy Fixed

0.89

Correlation Coefficient

Fidelity Managed  Timothy Fixed

Very poor diversification

The 3 months correlation between Fidelity and Timothy is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Managed Retirement and Timothy Fixed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Fixed Income and Fidelity Managed 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 Managed Retirement are associated (or correlated) with Timothy Fixed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timothy Fixed Income has no effect on the direction of Fidelity Managed i.e., Fidelity Managed and Timothy Fixed go up and down completely randomly.

Pair Corralation between Fidelity Managed and Timothy Fixed

Assuming the 90 days horizon Fidelity Managed Retirement is expected to generate 1.17 times more return on investment than Timothy Fixed. However, Fidelity Managed is 1.17 times more volatile than Timothy Fixed Income. It trades about -0.04 of its potential returns per unit of risk. Timothy Fixed Income is currently generating about -0.06 per unit of risk. If you would invest  5,390  in Fidelity Managed Retirement on October 20, 2024 and sell it today you would lose (57.00) from holding Fidelity Managed Retirement or give up 1.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Fidelity Managed Retirement  vs.  Timothy Fixed Income

Fidelity Managed Ret

Risk-Adjusted Performance

0 of 100

Very Weak

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

Timothy Fixed Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Timothy Fixed Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Timothy Fixed 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 Managed and Timothy Fixed

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

The idea behind Fidelity Managed Retirement and Timothy Fixed Income 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.