Correlation Between Blue Ribbon and Fidelity ClearPath

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

By analyzing existing cross correlation between Blue Ribbon Income and Fidelity ClearPath 2045, you can compare the effects of market volatilities on Blue Ribbon and Fidelity ClearPath 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 Blue Ribbon with a short position of Fidelity ClearPath. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Ribbon and Fidelity ClearPath.

Diversification Opportunities for Blue Ribbon and Fidelity ClearPath

0.25

Correlation Coefficient

Blue Ribbon  Fidelity ClearPath

Modest diversification

The 3 months correlation between Blue and Fidelity is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Blue Ribbon Income and Fidelity ClearPath 2045 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity ClearPath 2045 and Blue Ribbon 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 Blue Ribbon Income are associated (or correlated) with Fidelity ClearPath. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity ClearPath 2045 has no effect on the direction of Blue Ribbon i.e., Blue Ribbon and Fidelity ClearPath go up and down completely randomly.

Pair Corralation between Blue Ribbon and Fidelity ClearPath

Assuming the 90 days trading horizon Blue Ribbon Income is expected to generate 0.73 times more return on investment than Fidelity ClearPath. However, Blue Ribbon Income is 1.38 times less risky than Fidelity ClearPath. It trades about -0.07 of its potential returns per unit of risk. Fidelity ClearPath 2045 is currently generating about -0.08 per unit of risk. If you would invest  866.00  in Blue Ribbon Income on October 9, 2024 and sell it today you would lose (27.00) from holding Blue Ribbon Income or give up 3.12% of portfolio value over 90 days.

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

Blue Ribbon Income  vs.  Fidelity ClearPath 2045

Blue Ribbon Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue Ribbon Income has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Blue Ribbon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity ClearPath 2045

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity ClearPath 2045 has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Fidelity ClearPath is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blue Ribbon and Fidelity ClearPath

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

The idea behind Blue Ribbon Income and Fidelity ClearPath 2045 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.