Correlation Between IShares Dividend and Fidelity High

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

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

Diversification Opportunities for IShares Dividend and Fidelity High

0.62

Correlation Coefficient

IShares Dividend  Fidelity High

Poor diversification

The 3 months correlation between IShares and Fidelity is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding iShares Dividend Growers 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 IShares Dividend 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 iShares Dividend Growers 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 IShares Dividend i.e., IShares Dividend and Fidelity High go up and down completely randomly.

Pair Corralation between IShares Dividend and Fidelity High

Assuming the 90 days trading horizon IShares Dividend is expected to generate 1.98 times less return on investment than Fidelity High. In addition to that, IShares Dividend is 1.19 times more volatile than Fidelity High Dividend. It trades about 0.09 of its total potential returns per unit of risk. Fidelity High Dividend is currently generating about 0.21 per unit of volatility. If you would invest  3,631  in Fidelity High Dividend on September 2, 2024 and sell it today you would earn a total of  249.00  from holding Fidelity High Dividend or generate 6.86% return on investment over 90 days.

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

iShares Dividend Growers  vs.  Fidelity High Dividend

iShares Dividend Growers

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Dividend Growers are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, IShares Dividend is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Fidelity High Dividend

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity High Dividend are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Fidelity High may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IShares Dividend and Fidelity High

The main advantage of trading using opposite IShares Dividend and Fidelity High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Dividend 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 iShares Dividend Growers 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.