Correlation Between Fidelity Series and Johnson Enhanced

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

By analyzing existing cross correlation between Fidelity Series High and Johnson Enhanced Return, you can compare the effects of market volatilities on Fidelity Series and Johnson Enhanced 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 Series with a short position of Johnson Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Series and Johnson Enhanced.

Diversification Opportunities for Fidelity Series and Johnson Enhanced

-0.13

Correlation Coefficient

Fidelity Series  Johnson Enhanced

Good diversification

The 3 months correlation between Fidelity and Johnson is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Series High and Johnson Enhanced Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Enhanced Return and Fidelity Series 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 Series High are associated (or correlated) with Johnson Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Enhanced Return has no effect on the direction of Fidelity Series i.e., Fidelity Series and Johnson Enhanced go up and down completely randomly.

Pair Corralation between Fidelity Series and Johnson Enhanced

Assuming the 90 days horizon Fidelity Series High is expected to generate 0.19 times more return on investment than Johnson Enhanced. However, Fidelity Series High is 5.36 times less risky than Johnson Enhanced. It trades about 0.14 of its potential returns per unit of risk. Johnson Enhanced Return is currently generating about -0.12 per unit of risk. If you would invest  847.00  in Fidelity Series High on December 21, 2024 and sell it today you would earn a total of  15.00  from holding Fidelity Series High or generate 1.77% return on investment over 90 days.

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

Fidelity Series High  vs.  Johnson Enhanced Return

Fidelity Series High

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Series High are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Series is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Johnson Enhanced Return

Risk-Adjusted Performance

Very Weak

Over the last 90 days Johnson Enhanced Return has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical 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 Series and Johnson Enhanced

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

The idea behind Fidelity Series High and Johnson Enhanced Return 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.