Correlation Between Fidelity Sai and Blackrock Government

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

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

Diversification Opportunities for Fidelity Sai and Blackrock Government

-0.44

Correlation Coefficient

Fidelity Sai  Blackrock Government

Very good diversification

The 3 months correlation between Fidelity and Blackrock is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Sai Treasury and Blackrock Government Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Government Bond and Fidelity Sai 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 Sai Treasury are associated (or correlated) with Blackrock Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Government Bond has no effect on the direction of Fidelity Sai i.e., Fidelity Sai and Blackrock Government go up and down completely randomly.

Pair Corralation between Fidelity Sai and Blackrock Government

Assuming the 90 days horizon Fidelity Sai Treasury is expected to under-perform the Blackrock Government. In addition to that, Fidelity Sai is 1.15 times more volatile than Blackrock Government Bond. It trades about -0.19 of its total potential returns per unit of risk. Blackrock Government Bond is currently generating about -0.2 per unit of volatility. If you would invest  999.00  in Blackrock Government Bond on September 15, 2024 and sell it today you would lose (19.00) from holding Blackrock Government Bond or give up 1.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	57.81%
Values	Daily Returns

Fidelity Sai Treasury  vs.  Blackrock Government Bond

Fidelity Sai Treasury

Risk-Adjusted Performance

0 of 100

Very Weak

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

Blackrock Government Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Government Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Blackrock Government 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 Sai and Blackrock Government

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

The idea behind Fidelity Sai Treasury and Blackrock Government Bond 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.