Correlation Between Fidelity Flex and Dreyfus Balanced

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

By analyzing existing cross correlation between Fidelity Flex Servative and Dreyfus Balanced Opportunity, you can compare the effects of market volatilities on Fidelity Flex and Dreyfus Balanced 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 Flex with a short position of Dreyfus Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Flex and Dreyfus Balanced.

Diversification Opportunities for Fidelity Flex and Dreyfus Balanced

-0.07

Correlation Coefficient

Fidelity Flex  Dreyfus Balanced

Good diversification

The 3 months correlation between Fidelity and Dreyfus is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Flex Servative and Dreyfus Balanced Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Balanced Opp and Fidelity Flex 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 Flex Servative are associated (or correlated) with Dreyfus Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Balanced Opp has no effect on the direction of Fidelity Flex i.e., Fidelity Flex and Dreyfus Balanced go up and down completely randomly.

Pair Corralation between Fidelity Flex and Dreyfus Balanced

Assuming the 90 days horizon Fidelity Flex Servative is expected to generate 0.1 times more return on investment than Dreyfus Balanced. However, Fidelity Flex Servative is 9.67 times less risky than Dreyfus Balanced. It trades about 0.22 of its potential returns per unit of risk. Dreyfus Balanced Opportunity is currently generating about -0.03 per unit of risk. If you would invest  994.00  in Fidelity Flex Servative on December 21, 2024 and sell it today you would earn a total of  9.00  from holding Fidelity Flex Servative or generate 0.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Fidelity Flex Servative  vs.  Dreyfus Balanced Opportunity

Fidelity Flex Servative

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Flex Servative are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Fidelity Flex is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dreyfus Balanced Opp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dreyfus Balanced Opportunity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Dreyfus Balanced 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 Flex and Dreyfus Balanced

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

The idea behind Fidelity Flex Servative and Dreyfus Balanced Opportunity 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.