Correlation Between Fidelity Growth and Fidelity Nasdaq

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

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

Diversification Opportunities for Fidelity Growth and Fidelity Nasdaq

0.96

Correlation Coefficient

Fidelity Growth  Fidelity Nasdaq

Almost no diversification

The 3 months correlation between Fidelity and Fidelity is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Growth Strategies and Fidelity Nasdaq Posite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Nasdaq Posite and Fidelity Growth 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 Fidelity Growth Strategies are associated (or correlated) with Fidelity Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Nasdaq Posite has no effect on the direction of Fidelity Growth i.e., Fidelity Growth and Fidelity Nasdaq go up and down completely randomly.

Pair Corralation between Fidelity Growth and Fidelity Nasdaq

Assuming the 90 days horizon Fidelity Growth is expected to generate 1.23 times less return on investment than Fidelity Nasdaq. But when comparing it to its historical volatility, Fidelity Growth Strategies is 1.09 times less risky than Fidelity Nasdaq. It trades about 0.1 of its potential returns per unit of risk. Fidelity Nasdaq Posite is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  13,979  in Fidelity Nasdaq Posite on September 4, 2024 and sell it today you would earn a total of  10,847  from holding Fidelity Nasdaq Posite or generate 77.59% return on investment over 90 days.

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

Fidelity Growth Strategies  vs.  Fidelity Nasdaq Posite

Fidelity Growth Stra

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Growth Strategies are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Fidelity Growth showed solid returns over the last few months and may actually be approaching a breakup point.

Fidelity Nasdaq Posite

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Nasdaq Posite are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Fidelity Nasdaq showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidelity Growth and Fidelity Nasdaq

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

The idea behind Fidelity Growth Strategies and Fidelity Nasdaq Posite 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.