Correlation Between Fidelity Select and Fidelity Real

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

By analyzing existing cross correlation between Fidelity Select Portfolios and Fidelity Real Estate, you can compare the effects of market volatilities on Fidelity Select and Fidelity Real 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 Fidelity Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Select and Fidelity Real.

Diversification Opportunities for Fidelity Select and Fidelity Real

0.76

Correlation Coefficient

Fidelity Select  Fidelity Real

Poor diversification

The 3 months correlation between Fidelity and Fidelity is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Select Portfolios and Fidelity Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Real Estate 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 Portfolios are associated (or correlated) with Fidelity Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Real Estate has no effect on the direction of Fidelity Select i.e., Fidelity Select and Fidelity Real go up and down completely randomly.

Pair Corralation between Fidelity Select and Fidelity Real

Assuming the 90 days horizon Fidelity Select Portfolios is expected to under-perform the Fidelity Real. In addition to that, Fidelity Select is 1.17 times more volatile than Fidelity Real Estate. It trades about -0.14 of its total potential returns per unit of risk. Fidelity Real Estate is currently generating about -0.12 per unit of volatility. If you would invest  4,176  in Fidelity Real Estate on October 5, 2024 and sell it today you would lose (317.00) from holding Fidelity Real Estate or give up 7.59% of portfolio value over 90 days.

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

Fidelity Select Portfolios  vs.  Fidelity Real Estate

Fidelity Select Port

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Select Portfolios has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Fidelity Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Fidelity Select and Fidelity Real

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

The idea behind Fidelity Select Portfolios and Fidelity Real Estate 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.