Correlation Between Fidelity 500 and Monteagle Select

Can any of the company-specific risk be diversified away by investing in both Fidelity 500 and Monteagle Select 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 500 and Monteagle Select into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fidelity 500 Index and Monteagle Select Value, you can compare the effects of market volatilities on Fidelity 500 and Monteagle Select 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 500 with a short position of Monteagle Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity 500 and Monteagle Select.

Diversification Opportunities for Fidelity 500 and Monteagle Select

0.1

Correlation Coefficient

Fidelity 500  Monteagle Select

Average diversification

The 3 months correlation between Fidelity and Monteagle is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity 500 Index and Monteagle Select Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monteagle Select Value and Fidelity 500 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 500 Index are associated (or correlated) with Monteagle Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monteagle Select Value has no effect on the direction of Fidelity 500 i.e., Fidelity 500 and Monteagle Select go up and down completely randomly.

Pair Corralation between Fidelity 500 and Monteagle Select

Assuming the 90 days horizon Fidelity 500 Index is expected to generate 0.79 times more return on investment than Monteagle Select. However, Fidelity 500 Index is 1.26 times less risky than Monteagle Select. It trades about 0.1 of its potential returns per unit of risk. Monteagle Select Value is currently generating about -0.1 per unit of risk. If you would invest  20,111  in Fidelity 500 Index on October 25, 2024 and sell it today you would earn a total of  1,031  from holding Fidelity 500 Index or generate 5.13% return on investment over 90 days.

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

Fidelity 500 Index  vs.  Monteagle Select Value

Fidelity 500 Index

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity 500 Index are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Fidelity 500 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Monteagle Select Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monteagle Select Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward 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 500 and Monteagle Select

The main advantage of trading using opposite Fidelity 500 and Monteagle Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity 500 position performs unexpectedly, Monteagle Select 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 Monteagle Select will offset losses from the drop in Monteagle Select's long position.

The idea behind Fidelity 500 Index and Monteagle Select Value 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.