Correlation Between Fidelity Select and It Services

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

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

Diversification Opportunities for Fidelity Select and It Services

0.37

Correlation Coefficient

Fidelity Select  It Services

Weak diversification

The 3 months correlation between Fidelity and FBSOX is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Select Semiconductors and It Services Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on It Services Portfolio and Fidelity Select 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 Select Semiconductors are associated (or correlated) with It Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of It Services Portfolio has no effect on the direction of Fidelity Select i.e., Fidelity Select and It Services go up and down completely randomly.

Pair Corralation between Fidelity Select and It Services

Assuming the 90 days horizon Fidelity Select Semiconductors is expected to under-perform the It Services. In addition to that, Fidelity Select is 2.63 times more volatile than It Services Portfolio. It trades about -0.09 of its total potential returns per unit of risk. It Services Portfolio is currently generating about 0.02 per unit of volatility. If you would invest  6,049  in It Services Portfolio on December 29, 2024 and sell it today you would earn a total of  46.00  from holding It Services Portfolio or generate 0.76% return on investment over 90 days.

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

Fidelity Select Semiconductors  vs.  It Services Portfolio

Fidelity Select Semi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Select Semiconductors has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's essential indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

It Services Portfolio

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in It Services Portfolio are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, It Services 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 Select and It Services

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

The idea behind Fidelity Select Semiconductors and It Services Portfolio 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.