Correlation Between Fidelity Series and Delaware Wealth

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

By analyzing existing cross correlation between Fidelity Series 1000 and Delaware Wealth Builder, you can compare the effects of market volatilities on Fidelity Series and Delaware Wealth 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 Series with a short position of Delaware Wealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Series and Delaware Wealth.

Diversification Opportunities for Fidelity Series and Delaware Wealth

0.91

Correlation Coefficient

Fidelity Series  Delaware Wealth

Almost no diversification

The 3 months correlation between Fidelity and Delaware is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Series 1000 and Delaware Wealth Builder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delaware Wealth Builder and Fidelity Series 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 Series 1000 are associated (or correlated) with Delaware Wealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delaware Wealth Builder has no effect on the direction of Fidelity Series i.e., Fidelity Series and Delaware Wealth go up and down completely randomly.

Pair Corralation between Fidelity Series and Delaware Wealth

Assuming the 90 days horizon Fidelity Series 1000 is expected to under-perform the Delaware Wealth. But the mutual fund apears to be less risky and, when comparing its historical volatility, Fidelity Series 1000 is 1.03 times less risky than Delaware Wealth. The mutual fund trades about -0.45 of its potential returns per unit of risk. The Delaware Wealth Builder is currently generating about -0.35 of returns per unit of risk over similar time horizon. If you would invest  1,588  in Delaware Wealth Builder on October 4, 2024 and sell it today you would lose (113.00) from holding Delaware Wealth Builder or give up 7.12% of portfolio value over 90 days.

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

Fidelity Series 1000  vs.  Delaware Wealth Builder

Fidelity Series 1000

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Series 1000 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Fidelity Series is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Delaware Wealth Builder

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Delaware Wealth Builder has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Delaware Wealth 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 Series and Delaware Wealth

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

The idea behind Fidelity Series 1000 and Delaware Wealth Builder 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.