Correlation Between Fidelity Puritan and Fidelity Conservative

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

By analyzing existing cross correlation between Fidelity Puritan Fund and Fidelity Servative Income, you can compare the effects of market volatilities on Fidelity Puritan and Fidelity Conservative 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 Puritan with a short position of Fidelity Conservative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Puritan and Fidelity Conservative.

Diversification Opportunities for Fidelity Puritan and Fidelity Conservative

-0.47

Correlation Coefficient

Fidelity Puritan  Fidelity Conservative

Very good diversification

The 3 months correlation between Fidelity and Fidelity is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Puritan Fund and Fidelity Servative Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Servative Income and Fidelity Puritan 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 Puritan Fund are associated (or correlated) with Fidelity Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Servative Income has no effect on the direction of Fidelity Puritan i.e., Fidelity Puritan and Fidelity Conservative go up and down completely randomly.

Pair Corralation between Fidelity Puritan and Fidelity Conservative

Assuming the 90 days horizon Fidelity Puritan Fund is expected to under-perform the Fidelity Conservative. In addition to that, Fidelity Puritan is 13.73 times more volatile than Fidelity Servative Income. It trades about -0.08 of its total potential returns per unit of risk. Fidelity Servative Income is currently generating about 0.21 per unit of volatility. If you would invest  997.00  in Fidelity Servative Income on December 30, 2024 and sell it today you would earn a total of  8.00  from holding Fidelity Servative Income or generate 0.8% return on investment over 90 days.

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

Fidelity Puritan Fund  vs.  Fidelity Servative Income

Fidelity Puritan

Risk-Adjusted Performance

Very Weak

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

Fidelity Servative Income

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Servative Income are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Fidelity Conservative 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 Puritan and Fidelity Conservative

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

The idea behind Fidelity Puritan Fund and Fidelity Servative Income 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.