Correlation Between Fidelity Value and Fidelity Blue

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

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

Diversification Opportunities for Fidelity Value and Fidelity Blue

0.73

Correlation Coefficient

Fidelity Value  Fidelity Blue

Poor diversification

The 3 months correlation between Fidelity and Fidelity is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Value Discovery and Fidelity Blue Chip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Blue Chip and Fidelity Value 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 Value Discovery are associated (or correlated) with Fidelity Blue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Blue Chip has no effect on the direction of Fidelity Value i.e., Fidelity Value and Fidelity Blue go up and down completely randomly.

Pair Corralation between Fidelity Value and Fidelity Blue

Assuming the 90 days horizon Fidelity Value Discovery is expected to generate 0.94 times more return on investment than Fidelity Blue. However, Fidelity Value Discovery is 1.06 times less risky than Fidelity Blue. It trades about 0.04 of its potential returns per unit of risk. Fidelity Blue Chip is currently generating about 0.02 per unit of risk. If you would invest  3,601  in Fidelity Value Discovery on December 30, 2024 and sell it today you would earn a total of  59.00  from holding Fidelity Value Discovery or generate 1.64% return on investment over 90 days.

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

Fidelity Value Discovery  vs.  Fidelity Blue Chip

Fidelity Value Discovery

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Value Discovery are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Fidelity Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Blue Chip

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Blue Chip are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Blue 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 Value and Fidelity Blue

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

The idea behind Fidelity Value Discovery and Fidelity Blue Chip 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.