Correlation Between Fidelity Total and Fidelity Flex

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

By analyzing existing cross correlation between Fidelity Total International and Fidelity Flex 500, you can compare the effects of market volatilities on Fidelity Total and Fidelity Flex 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 Total with a short position of Fidelity Flex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Total and Fidelity Flex.

Diversification Opportunities for Fidelity Total and Fidelity Flex

-0.24

Correlation Coefficient

Fidelity Total  Fidelity Flex

Very good diversification

The 3 months correlation between Fidelity and Fidelity is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Total International and Fidelity Flex 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Flex 500 and Fidelity Total 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 Total International are associated (or correlated) with Fidelity Flex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Flex 500 has no effect on the direction of Fidelity Total i.e., Fidelity Total and Fidelity Flex go up and down completely randomly.

Pair Corralation between Fidelity Total and Fidelity Flex

Assuming the 90 days horizon Fidelity Total International is expected to under-perform the Fidelity Flex. But the mutual fund apears to be less risky and, when comparing its historical volatility, Fidelity Total International is 1.4 times less risky than Fidelity Flex. The mutual fund trades about -0.46 of its potential returns per unit of risk. The Fidelity Flex 500 is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  2,590  in Fidelity Flex 500 on October 8, 2024 and sell it today you would lose (55.00) from holding Fidelity Flex 500 or give up 2.12% of portfolio value over 90 days.

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

Fidelity Total International  vs.  Fidelity Flex 500

Fidelity Total Inter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Total International has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Fidelity Flex 500

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Flex 500 are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Fidelity Flex 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 Total and Fidelity Flex

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

The idea behind Fidelity Total International and Fidelity Flex 500 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .