Correlation Between Fidelity Natural and Gold Portfolio

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

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

Diversification Opportunities for Fidelity Natural and Gold Portfolio

0.71

Correlation Coefficient

Fidelity Natural  Gold Portfolio

Poor diversification

The 3 months correlation between Fidelity and Gold is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Natural Resources and Gold Portfolio Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Portfolio Gold and Fidelity Natural 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 Natural Resources are associated (or correlated) with Gold Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Portfolio Gold has no effect on the direction of Fidelity Natural i.e., Fidelity Natural and Gold Portfolio go up and down completely randomly.

Pair Corralation between Fidelity Natural and Gold Portfolio

Assuming the 90 days horizon Fidelity Natural is expected to generate 3.11 times less return on investment than Gold Portfolio. But when comparing it to its historical volatility, Fidelity Natural Resources is 1.55 times less risky than Gold Portfolio. It trades about 0.16 of its potential returns per unit of risk. Gold Portfolio Gold is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  2,442  in Gold Portfolio Gold on December 29, 2024 and sell it today you would earn a total of  851.00  from holding Gold Portfolio Gold or generate 34.85% return on investment over 90 days.

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

Fidelity Natural Resources  vs.  Gold Portfolio Gold

Fidelity Natural Res

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Natural Resources are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity Natural may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Gold Portfolio Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Portfolio Gold are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Gold Portfolio showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidelity Natural and Gold Portfolio

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

The idea behind Fidelity Natural Resources and Gold Portfolio Gold 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.