Correlation Between Pro Blend and Fidelity Series

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

By analyzing existing cross correlation between Pro Blend Moderate Term and Fidelity Series All Sector, you can compare the effects of market volatilities on Pro Blend and Fidelity Series 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 Pro Blend with a short position of Fidelity Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pro Blend and Fidelity Series.

Diversification Opportunities for Pro Blend and Fidelity Series

0.43

Correlation Coefficient

Pro Blend  Fidelity Series

Very weak diversification

The 3 months correlation between Pro and Fidelity is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Pro Blend Moderate Term and Fidelity Series All Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Series All and Pro Blend 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 Pro Blend Moderate Term are associated (or correlated) with Fidelity Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Series All has no effect on the direction of Pro Blend i.e., Pro Blend and Fidelity Series go up and down completely randomly.

Pair Corralation between Pro Blend and Fidelity Series

Assuming the 90 days horizon Pro Blend Moderate Term is expected to generate 0.76 times more return on investment than Fidelity Series. However, Pro Blend Moderate Term is 1.32 times less risky than Fidelity Series. It trades about -0.25 of its potential returns per unit of risk. Fidelity Series All Sector is currently generating about -0.25 per unit of risk. If you would invest  1,489  in Pro Blend Moderate Term on September 24, 2024 and sell it today you would lose (84.00) from holding Pro Blend Moderate Term or give up 5.64% of portfolio value over 90 days.

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

Pro Blend Moderate Term  vs.  Fidelity Series All Sector

Pro Blend Moderate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pro Blend Moderate Term has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Fidelity Series All

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Series All Sector has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Fidelity Series is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pro Blend and Fidelity Series

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

The idea behind Pro Blend Moderate Term and Fidelity Series All Sector 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..