Correlation Between Heartland Value and Fidelity Series

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

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

Diversification Opportunities for Heartland Value and Fidelity Series

0.19

Correlation Coefficient

Heartland Value  Fidelity Series

Average diversification

The 3 months correlation between Heartland and Fidelity is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Value Plus and Fidelity Series Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Series Large and Heartland 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 Heartland Value Plus are associated (or correlated) with Fidelity Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Series Large has no effect on the direction of Heartland Value i.e., Heartland Value and Fidelity Series go up and down completely randomly.

Pair Corralation between Heartland Value and Fidelity Series

Assuming the 90 days horizon Heartland Value Plus is expected to under-perform the Fidelity Series. But the mutual fund apears to be less risky and, when comparing its historical volatility, Heartland Value Plus is 1.04 times less risky than Fidelity Series. The mutual fund trades about -0.4 of its potential returns per unit of risk. The Fidelity Series Large is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  2,591  in Fidelity Series Large on October 10, 2024 and sell it today you would lose (35.00) from holding Fidelity Series Large or give up 1.35% of portfolio value over 90 days.

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

Heartland Value Plus  vs.  Fidelity Series Large

Heartland Value Plus

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fidelity Series Large

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Series Large are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Fidelity Series may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Heartland Value and Fidelity Series

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

The idea behind Heartland Value Plus and Fidelity Series Large 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.