Correlation Between Fidelity Managed and Berwyn Income

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

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

Diversification Opportunities for Fidelity Managed and Berwyn Income

0.78

Correlation Coefficient

Fidelity Managed  Berwyn Income

Poor diversification

The 3 months correlation between Fidelity and Berwyn is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Managed Retirement and Berwyn Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berwyn Income and Fidelity Managed 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 Managed Retirement are associated (or correlated) with Berwyn Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berwyn Income has no effect on the direction of Fidelity Managed i.e., Fidelity Managed and Berwyn Income go up and down completely randomly.

Pair Corralation between Fidelity Managed and Berwyn Income

Assuming the 90 days horizon Fidelity Managed Retirement is expected to under-perform the Berwyn Income. In addition to that, Fidelity Managed is 1.26 times more volatile than Berwyn Income Fund. It trades about 0.0 of its total potential returns per unit of risk. Berwyn Income Fund is currently generating about 0.01 per unit of volatility. If you would invest  1,342  in Berwyn Income Fund on September 14, 2024 and sell it today you would earn a total of  2.00  from holding Berwyn Income Fund or generate 0.15% return on investment over 90 days.

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

Fidelity Managed Retirement  vs.  Berwyn Income Fund

Fidelity Managed Ret

Risk-Adjusted Performance

0 of 100

Weak

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

Berwyn Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Berwyn Income Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Berwyn Income 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 Managed and Berwyn Income

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

The idea behind Fidelity Managed Retirement and Berwyn Income 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.