Correlation Between Inverse Nasdaq-100 and Fidelity Puritan

Can any of the company-specific risk be diversified away by investing in both Inverse Nasdaq-100 and Fidelity Puritan 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 Inverse Nasdaq-100 and Fidelity Puritan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Inverse Nasdaq 100 Strategy and Fidelity Puritan Fund, you can compare the effects of market volatilities on Inverse Nasdaq-100 and Fidelity Puritan 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 Inverse Nasdaq-100 with a short position of Fidelity Puritan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inverse Nasdaq-100 and Fidelity Puritan.

Diversification Opportunities for Inverse Nasdaq-100 and Fidelity Puritan

-0.74

Correlation Coefficient

Inverse Nasdaq-100  Fidelity Puritan

Pay attention - limited upside

The 3 months correlation between Inverse and Fidelity is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Inverse Nasdaq 100 Strategy and Fidelity Puritan Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Puritan and Inverse Nasdaq-100 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 Inverse Nasdaq 100 Strategy are associated (or correlated) with Fidelity Puritan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Puritan has no effect on the direction of Inverse Nasdaq-100 i.e., Inverse Nasdaq-100 and Fidelity Puritan go up and down completely randomly.

Pair Corralation between Inverse Nasdaq-100 and Fidelity Puritan

Assuming the 90 days horizon Inverse Nasdaq 100 Strategy is expected to under-perform the Fidelity Puritan. In addition to that, Inverse Nasdaq-100 is 1.54 times more volatile than Fidelity Puritan Fund. It trades about -0.08 of its total potential returns per unit of risk. Fidelity Puritan Fund is currently generating about 0.06 per unit of volatility. If you would invest  2,088  in Fidelity Puritan Fund on October 26, 2024 and sell it today you would earn a total of  490.00  from holding Fidelity Puritan Fund or generate 23.47% return on investment over 90 days.

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

Inverse Nasdaq 100 Strategy  vs.  Fidelity Puritan Fund

Inverse Nasdaq 100

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inverse Nasdaq 100 Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Fidelity Puritan

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Puritan Fund are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, Fidelity Puritan is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Inverse Nasdaq-100 and Fidelity Puritan

The main advantage of trading using opposite Inverse Nasdaq-100 and Fidelity Puritan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inverse Nasdaq-100 position performs unexpectedly, Fidelity Puritan 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 Puritan will offset losses from the drop in Fidelity Puritan's long position.

The idea behind Inverse Nasdaq 100 Strategy and Fidelity Puritan Fund 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.