Correlation Between Fidelity Total and Fidelity Short

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

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

Diversification Opportunities for Fidelity Total and Fidelity Short

0.47

Correlation Coefficient

Fidelity Total  Fidelity Short

Very weak diversification

The 3 months correlation between Fidelity and Fidelity is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Total Bond and Fidelity Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Short Duration and Fidelity Total 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 Total Bond are associated (or correlated) with Fidelity Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Short Duration has no effect on the direction of Fidelity Total i.e., Fidelity Total and Fidelity Short go up and down completely randomly.

Pair Corralation between Fidelity Total and Fidelity Short

Assuming the 90 days horizon Fidelity Total is expected to generate 2.4 times less return on investment than Fidelity Short. In addition to that, Fidelity Total is 2.06 times more volatile than Fidelity Short Duration. It trades about 0.03 of its total potential returns per unit of risk. Fidelity Short Duration is currently generating about 0.17 per unit of volatility. If you would invest  840.00  in Fidelity Short Duration on October 9, 2024 and sell it today you would earn a total of  59.00  from holding Fidelity Short Duration or generate 7.02% return on investment over 90 days.

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

Fidelity Total Bond  vs.  Fidelity Short Duration

Fidelity Total Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Total Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Fidelity Total is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Short Duration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Short Duration has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical indicators, Fidelity Short 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 Total and Fidelity Short

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

The idea behind Fidelity Total Bond and Fidelity Short Duration 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.