Correlation Between Dell Technologies and Fidelity Value

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

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

Diversification Opportunities for Dell Technologies and Fidelity Value

0.83

Correlation Coefficient

Dell Technologies  Fidelity Value

Very poor diversification

The 3 months correlation between Dell and Fidelity is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Dell Technologies and Fidelity Value Factor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Value Factor and Dell Technologies 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 Dell Technologies are associated (or correlated) with Fidelity Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Value Factor has no effect on the direction of Dell Technologies i.e., Dell Technologies and Fidelity Value go up and down completely randomly.

Pair Corralation between Dell Technologies and Fidelity Value

Given the investment horizon of 90 days Dell Technologies is expected to generate 3.9 times more return on investment than Fidelity Value. However, Dell Technologies is 3.9 times more volatile than Fidelity Value Factor. It trades about 0.09 of its potential returns per unit of risk. Fidelity Value Factor is currently generating about 0.11 per unit of risk. If you would invest  3,766  in Dell Technologies on September 5, 2024 and sell it today you would earn a total of  8,790  from holding Dell Technologies or generate 233.4% return on investment over 90 days.

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

Dell Technologies  vs.  Fidelity Value Factor

Dell Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dell Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Dell Technologies disclosed solid returns over the last few months and may actually be approaching a breakup point.

Fidelity Value Factor

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Value Factor are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Fidelity Value may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Dell Technologies and Fidelity Value

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

The idea behind Dell Technologies and Fidelity Value Factor 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.