Correlation Between Aggressive Growth and Fidelity Convertible

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

By analyzing existing cross correlation between Aggressive Growth Allocation and Fidelity Vertible Securities, you can compare the effects of market volatilities on Aggressive Growth and Fidelity Convertible 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 Aggressive Growth with a short position of Fidelity Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aggressive Growth and Fidelity Convertible.

Diversification Opportunities for Aggressive Growth and Fidelity Convertible

0.84

Correlation Coefficient

Aggressive Growth  Fidelity Convertible

Very poor diversification

The 3 months correlation between Aggressive and Fidelity is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Aggressive Growth Allocation and Fidelity Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Convertible and Aggressive Growth 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 Aggressive Growth Allocation are associated (or correlated) with Fidelity Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Convertible has no effect on the direction of Aggressive Growth i.e., Aggressive Growth and Fidelity Convertible go up and down completely randomly.

Pair Corralation between Aggressive Growth and Fidelity Convertible

Assuming the 90 days horizon Aggressive Growth Allocation is expected to under-perform the Fidelity Convertible. But the mutual fund apears to be less risky and, when comparing its historical volatility, Aggressive Growth Allocation is 1.41 times less risky than Fidelity Convertible. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Fidelity Vertible Securities is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  3,522  in Fidelity Vertible Securities on October 15, 2024 and sell it today you would lose (84.00) from holding Fidelity Vertible Securities or give up 2.39% of portfolio value over 90 days.

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

Aggressive Growth Allocation  vs.  Fidelity Vertible Securities

Aggressive Growth

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fidelity Convertible

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Aggressive Growth and Fidelity Convertible

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

The idea behind Aggressive Growth Allocation and Fidelity Vertible 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.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.