Correlation Between Fidelity Sai and Short Oil

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

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

Diversification Opportunities for Fidelity Sai and Short Oil

-0.41

Correlation Coefficient

Fidelity Sai  Short Oil

Very good diversification

The 3 months correlation between Fidelity and Short is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Sai Convertible and Short Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Oil Gas and Fidelity Sai 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 Sai Convertible are associated (or correlated) with Short Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Oil Gas has no effect on the direction of Fidelity Sai i.e., Fidelity Sai and Short Oil go up and down completely randomly.

Pair Corralation between Fidelity Sai and Short Oil

Assuming the 90 days horizon Fidelity Sai is expected to generate 16.76 times less return on investment than Short Oil. But when comparing it to its historical volatility, Fidelity Sai Convertible is 8.1 times less risky than Short Oil. It trades about 0.27 of its potential returns per unit of risk. Short Oil Gas is currently generating about 0.56 of returns per unit of risk over similar time horizon. If you would invest  1,343  in Short Oil Gas on September 19, 2024 and sell it today you would earn a total of  150.00  from holding Short Oil Gas or generate 11.17% return on investment over 90 days.

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

Fidelity Sai Convertible  vs.  Short Oil Gas

Fidelity Sai Convertible

Risk-Adjusted Performance

28 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Sai Convertible are ranked lower than 28 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Sai is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Short Oil Gas

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Short Oil Gas are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Short Oil is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fidelity Sai and Short Oil

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

The idea behind Fidelity Sai Convertible and Short Oil Gas 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.