Correlation Between Fidelity Income and Fidelity Inflation-protec
Can any of the company-specific risk be diversified away by investing in both Fidelity Income and Fidelity Inflation-protec 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 Income and Fidelity Inflation-protec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Income Replacement and Fidelity Inflation Protected Bond, you can compare the effects of market volatilities on Fidelity Income and Fidelity Inflation-protec 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 Income with a short position of Fidelity Inflation-protec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Income and Fidelity Inflation-protec.
Diversification Opportunities for Fidelity Income and Fidelity Inflation-protec
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Income Replacement and Fidelity Inflation Protected B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Inflation-protec and Fidelity Income 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 Income Replacement are associated (or correlated) with Fidelity Inflation-protec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Inflation-protec has no effect on the direction of Fidelity Income i.e., Fidelity Income and Fidelity Inflation-protec go up and down completely randomly.
Pair Corralation between Fidelity Income and Fidelity Inflation-protec
Assuming the 90 days horizon Fidelity Income Replacement is expected to generate 0.97 times more return on investment than Fidelity Inflation-protec. However, Fidelity Income Replacement is 1.03 times less risky than Fidelity Inflation-protec. It trades about 0.05 of its potential returns per unit of risk. Fidelity Inflation Protected Bond is currently generating about -0.02 per unit of risk. If you would invest 5,640 in Fidelity Income Replacement on September 4, 2024 and sell it today you would earn a total of 42.00 from holding Fidelity Income Replacement or generate 0.74% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 98.44% |
Values | Daily Returns |
Fidelity Income Replacement vs. Fidelity Inflation Protected B
Performance |
Timeline |
Fidelity Income Repl |
Fidelity Inflation-protec |
Fidelity Income and Fidelity Inflation-protec Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fidelity Income and Fidelity Inflation-protec
The main advantage of trading using opposite Fidelity Income and Fidelity Inflation-protec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Income position performs unexpectedly, Fidelity Inflation-protec 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 Inflation-protec will offset losses from the drop in Fidelity Inflation-protec's long position.Fidelity Income vs. Calamos Dynamic Convertible | Fidelity Income vs. Virtus Convertible | Fidelity Income vs. Advent Claymore Convertible | Fidelity Income vs. Fidelity Sai Convertible |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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