Correlation Between Fidelity Series and Touchstone Large

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

Diversification Opportunities for Fidelity Series and Touchstone Large

0.95

Correlation Coefficient

Fidelity Series  Touchstone Large

Almost no diversification

The 3 months correlation between Fidelity and Touchstone is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Series 1000 and Touchstone Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Large Cap 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 Touchstone Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Large Cap has no effect on the direction of Fidelity Series i.e., Fidelity Series and Touchstone Large go up and down completely randomly.

Pair Corralation between Fidelity Series and Touchstone Large

Assuming the 90 days horizon Fidelity Series 1000 is expected to under-perform the Touchstone Large. But the mutual fund apears to be less risky and, when comparing its historical volatility, Fidelity Series 1000 is 1.23 times less risky than Touchstone Large. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Touchstone Large Cap is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,964  in Touchstone Large Cap on November 29, 2024 and sell it today you would earn a total of  11.00  from holding Touchstone Large Cap or generate 0.56% return on investment over 90 days.

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

Fidelity Series 1000  vs.  Touchstone Large Cap

Fidelity Series 1000

Risk-Adjusted Performance

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.

Touchstone Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Touchstone Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Touchstone Large 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 Touchstone Large

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

The idea behind Fidelity Series 1000 and Touchstone Large Cap 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.