Correlation Between Stellar and Fidelity

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

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

Diversification Opportunities for Stellar and Fidelity

-0.51

Correlation Coefficient

Stellar  Fidelity

Excellent diversification

The 3 months correlation between Stellar and Fidelity is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and Fidelity Low Volatility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Low Volatility and Stellar 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 Stellar are associated (or correlated) with Fidelity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Low Volatility has no effect on the direction of Stellar i.e., Stellar and Fidelity go up and down completely randomly.

Pair Corralation between Stellar and Fidelity

Assuming the 90 days trading horizon Stellar is expected to under-perform the Fidelity. In addition to that, Stellar is 9.4 times more volatile than Fidelity Low Volatility. It trades about -0.06 of its total potential returns per unit of risk. Fidelity Low Volatility is currently generating about 0.06 per unit of volatility. If you would invest  1,195  in Fidelity Low Volatility on December 22, 2024 and sell it today you would earn a total of  28.00  from holding Fidelity Low Volatility or generate 2.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.75%
Values	Daily Returns

Stellar  vs.  Fidelity Low Volatility

Stellar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stellar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's primary indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Stellar shareholders.

Fidelity Low Volatility

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Low Volatility are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Stellar and Fidelity

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

The idea behind Stellar and Fidelity Low Volatility 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.