Correlation Between Fidelity Equity and Fidelity Balanced

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

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

Diversification Opportunities for Fidelity Equity and Fidelity Balanced

0.55

Correlation Coefficient

Fidelity Equity  Fidelity Balanced

Very weak diversification

The 3 months correlation between Fidelity and Fidelity is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Equity Dividend and Fidelity Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Balanced and Fidelity Equity 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 Equity Dividend are associated (or correlated) with Fidelity Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Balanced has no effect on the direction of Fidelity Equity i.e., Fidelity Equity and Fidelity Balanced go up and down completely randomly.

Pair Corralation between Fidelity Equity and Fidelity Balanced

Assuming the 90 days horizon Fidelity Equity Dividend is expected to under-perform the Fidelity Balanced. In addition to that, Fidelity Equity is 1.21 times more volatile than Fidelity Balanced Fund. It trades about -0.1 of its total potential returns per unit of risk. Fidelity Balanced Fund is currently generating about 0.03 per unit of volatility. If you would invest  2,968  in Fidelity Balanced Fund on September 22, 2024 and sell it today you would earn a total of  27.00  from holding Fidelity Balanced Fund or generate 0.91% return on investment over 90 days.

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

Fidelity Equity Dividend  vs.  Fidelity Balanced Fund

Fidelity Equity Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fidelity Balanced

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Balanced Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Fidelity Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fidelity Equity and Fidelity Balanced

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

The idea behind Fidelity Equity Dividend and Fidelity Balanced Fund 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.