Correlation Between Brandywineglobal and Fidelity Focused

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

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

Diversification Opportunities for Brandywineglobal and Fidelity Focused

0.86

Correlation Coefficient

Brandywineglobal  Fidelity Focused

Very poor diversification

The 3 months correlation between Brandywineglobal and Fidelity is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Brandywineglobal Corporate and Fidelity Focused Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Focused Stock and Brandywineglobal 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 Brandywineglobal Corporate 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 Stock has no effect on the direction of Brandywineglobal i.e., Brandywineglobal and Fidelity Focused go up and down completely randomly.

Pair Corralation between Brandywineglobal and Fidelity Focused

Assuming the 90 days horizon Brandywineglobal is expected to generate 9.57 times less return on investment than Fidelity Focused. But when comparing it to its historical volatility, Brandywineglobal Corporate is 8.5 times less risky than Fidelity Focused. It trades about 0.18 of its potential returns per unit of risk. Fidelity Focused Stock is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  3,813  in Fidelity Focused Stock on September 3, 2024 and sell it today you would earn a total of  502.00  from holding Fidelity Focused Stock or generate 13.17% return on investment over 90 days.

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

Brandywineglobal Corporate  vs.  Fidelity Focused Stock

Brandywineglobal C

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brandywineglobal Corporate are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Brandywineglobal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Focused Stock

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Focused Stock are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Fidelity Focused may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Brandywineglobal and Fidelity Focused

The main advantage of trading using opposite Brandywineglobal and Fidelity Focused positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brandywineglobal 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 Brandywineglobal Corporate and Fidelity Focused Stock 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.