Correlation Between Salon City and Fidelity High

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

By analyzing existing cross correlation between Salon City and Fidelity High Dividend, you can compare the effects of market volatilities on Salon City and Fidelity High 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 Salon City with a short position of Fidelity High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salon City and Fidelity High.

Diversification Opportunities for Salon City and Fidelity High

0.0

Correlation Coefficient

Salon City  Fidelity High

Pay attention - limited upside

The 3 months correlation between Salon and Fidelity is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Salon City and Fidelity High Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity High Dividend and Salon City 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 Salon City are associated (or correlated) with Fidelity High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity High Dividend has no effect on the direction of Salon City i.e., Salon City and Fidelity High go up and down completely randomly.

Pair Corralation between Salon City and Fidelity High

If you would invest  0.01  in Salon City on October 1, 2024 and sell it today you would lose  0.00  from holding Salon City or give up 0.0% of portfolio value over 90 days.

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

Salon City  vs.  Fidelity High Dividend

Salon City

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Salon City has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Salon City is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Fidelity High Dividend

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Fidelity High Dividend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Fidelity High is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Salon City and Fidelity High

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

The idea behind Salon City and Fidelity High Dividend 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.