Correlation Between Fidelity Series and Pace Mortgage

Can any of the company-specific risk be diversified away by investing in both Fidelity Series and Pace Mortgage 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 Pace Mortgage 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 Pace Mortgage Backed Securities, you can compare the effects of market volatilities on Fidelity Series and Pace Mortgage 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 Pace Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Series and Pace Mortgage.

Diversification Opportunities for Fidelity Series and Pace Mortgage

-0.49

Correlation Coefficient

Fidelity Series  Pace Mortgage

Very good diversification

The 3 months correlation between Fidelity and Pace is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Series 1000 and Pace Mortgage Backed Securitie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Mortgage Backed 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 Pace Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Mortgage Backed has no effect on the direction of Fidelity Series i.e., Fidelity Series and Pace Mortgage go up and down completely randomly.

Pair Corralation between Fidelity Series and Pace Mortgage

If you would invest  1,652  in Fidelity Series 1000 on December 26, 2024 and sell it today you would earn a total of  21.00  from holding Fidelity Series 1000 or generate 1.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	27.87%
Values	Daily Returns

Fidelity Series 1000  vs.  Pace Mortgage Backed Securitie

Fidelity Series 1000

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Series 1000 are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. 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.

Pace Mortgage Backed

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pace Mortgage Backed Securities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Pace Mortgage 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 Pace Mortgage

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

The idea behind Fidelity Series 1000 and Pace Mortgage Backed Securities 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.