Correlation Between Swan Hedged and Fidelity Dynamic

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

By analyzing existing cross correlation between Swan Hedged Equity and Fidelity Dynamic Buffered, you can compare the effects of market volatilities on Swan Hedged and Fidelity Dynamic 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 Swan Hedged with a short position of Fidelity Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swan Hedged and Fidelity Dynamic.

Diversification Opportunities for Swan Hedged and Fidelity Dynamic

0.96

Correlation Coefficient

Swan Hedged  Fidelity Dynamic

Almost no diversification

The 3 months correlation between Swan and Fidelity is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Swan Hedged Equity and Fidelity Dynamic Buffered in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Dynamic Buffered and Swan Hedged 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 Swan Hedged Equity are associated (or correlated) with Fidelity Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Dynamic Buffered has no effect on the direction of Swan Hedged i.e., Swan Hedged and Fidelity Dynamic go up and down completely randomly.

Pair Corralation between Swan Hedged and Fidelity Dynamic

Given the investment horizon of 90 days Swan Hedged Equity is expected to under-perform the Fidelity Dynamic. But the etf apears to be less risky and, when comparing its historical volatility, Swan Hedged Equity is 1.19 times less risky than Fidelity Dynamic. The etf trades about -0.14 of its potential returns per unit of risk. The Fidelity Dynamic Buffered is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  2,784  in Fidelity Dynamic Buffered on October 10, 2024 and sell it today you would lose (35.00) from holding Fidelity Dynamic Buffered or give up 1.26% of portfolio value over 90 days.

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

Swan Hedged Equity  vs.  Fidelity Dynamic Buffered

Swan Hedged Equity

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Swan Hedged Equity are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Swan Hedged is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Fidelity Dynamic Buffered

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Dynamic Buffered are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Fidelity Dynamic is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Swan Hedged and Fidelity Dynamic

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

The idea behind Swan Hedged Equity and Fidelity Dynamic Buffered 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 Anywhere module to track or share privately all of your investments from the convenience of any device.