Correlation Between TRON and Fidelity Focused

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

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

Diversification Opportunities for TRON and Fidelity Focused

0.62

Correlation Coefficient

TRON  Fidelity Focused

Poor diversification

The 3 months correlation between TRON and Fidelity is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding TRON and Fidelity Focused High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Focused High and TRON 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 TRON are associated (or correlated) with Fidelity Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Focused High has no effect on the direction of TRON i.e., TRON and Fidelity Focused go up and down completely randomly.

Pair Corralation between TRON and Fidelity Focused

Assuming the 90 days trading horizon TRON is expected to under-perform the Fidelity Focused. In addition to that, TRON is 23.25 times more volatile than Fidelity Focused High. It trades about -0.11 of its total potential returns per unit of risk. Fidelity Focused High is currently generating about -0.31 per unit of volatility. If you would invest  819.00  in Fidelity Focused High on October 11, 2024 and sell it today you would lose (9.00) from holding Fidelity Focused High or give up 1.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.91%
Values	Daily Returns

TRON  vs.  Fidelity Focused High

TRON

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TRON are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, TRON exhibited solid returns over the last few months and may actually be approaching a breakup point.

Fidelity Focused High

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Focused High are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Fidelity Focused is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with TRON and Fidelity Focused

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

The idea behind TRON and Fidelity Focused High 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.