Correlation Between Siit High and Fidelity Series

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

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

Diversification Opportunities for Siit High and Fidelity Series

0.84

Correlation Coefficient

Siit High  Fidelity Series

Very poor diversification

The 3 months correlation between Siit and Fidelity is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Siit High Yield and Fidelity Series Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Series Total and Siit High 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 Siit High Yield 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 Total has no effect on the direction of Siit High i.e., Siit High and Fidelity Series go up and down completely randomly.

Pair Corralation between Siit High and Fidelity Series

Assuming the 90 days horizon Siit High is expected to generate 2.68 times less return on investment than Fidelity Series. But when comparing it to its historical volatility, Siit High Yield is 2.53 times less risky than Fidelity Series. It trades about 0.11 of its potential returns per unit of risk. Fidelity Series Total is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,234  in Fidelity Series Total on September 25, 2024 and sell it today you would earn a total of  735.00  from holding Fidelity Series Total or generate 59.56% return on investment over 90 days.

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

Siit High Yield  vs.  Fidelity Series Total

Siit High Yield

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Siit High Yield are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Siit High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Series Total

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Series Total are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Fidelity Series is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Siit High and Fidelity Series

The main advantage of trading using opposite Siit High and Fidelity Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siit High 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 Siit High Yield and Fidelity Series Total 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .