Correlation Between Blackrock Focus and Fidelity Select

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

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

Diversification Opportunities for Blackrock Focus and Fidelity Select

0.56

Correlation Coefficient

Blackrock Focus  Fidelity Select

Very weak diversification

The 3 months correlation between Blackrock and Fidelity is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Focus Growth and Fidelity Select Semiconductors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Select Semi and Blackrock Focus 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 Blackrock Focus Growth are associated (or correlated) with Fidelity Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Select Semi has no effect on the direction of Blackrock Focus i.e., Blackrock Focus and Fidelity Select go up and down completely randomly.

Pair Corralation between Blackrock Focus and Fidelity Select

Assuming the 90 days horizon Blackrock Focus Growth is expected to under-perform the Fidelity Select. But the mutual fund apears to be less risky and, when comparing its historical volatility, Blackrock Focus Growth is 1.88 times less risky than Fidelity Select. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Fidelity Select Semiconductors is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  3,429  in Fidelity Select Semiconductors on November 29, 2024 and sell it today you would lose (128.00) from holding Fidelity Select Semiconductors or give up 3.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

Blackrock Focus Growth  vs.  Fidelity Select Semiconductors

Blackrock Focus Growth

Risk-Adjusted Performance

Very Weak

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

Fidelity Select Semi

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Blackrock Focus and Fidelity Select

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

The idea behind Blackrock Focus Growth and Fidelity Select Semiconductors 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.