Correlation Between Fidelity Managed and Baron New

Can any of the company-specific risk be diversified away by investing in both Fidelity Managed and Baron New 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 Baron New 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 Baron New Asia, you can compare the effects of market volatilities on Fidelity Managed and Baron New 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 Baron New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Managed and Baron New.

Diversification Opportunities for Fidelity Managed and Baron New

0.38

Correlation Coefficient

Fidelity Managed  Baron New

Weak diversification

The 3 months correlation between Fidelity and Baron is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Managed Retirement and Baron New Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron New Asia 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 Baron New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron New Asia has no effect on the direction of Fidelity Managed i.e., Fidelity Managed and Baron New go up and down completely randomly.

Pair Corralation between Fidelity Managed and Baron New

Assuming the 90 days horizon Fidelity Managed Retirement is expected to generate 0.38 times more return on investment than Baron New. However, Fidelity Managed Retirement is 2.62 times less risky than Baron New. It trades about 0.08 of its potential returns per unit of risk. Baron New Asia is currently generating about -0.09 per unit of risk. If you would invest  5,399  in Fidelity Managed Retirement on September 2, 2024 and sell it today you would earn a total of  90.00  from holding Fidelity Managed Retirement or generate 1.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	71.88%
Values	Daily Returns

Fidelity Managed Retirement  vs.  Baron New Asia

Fidelity Managed Ret

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Managed Retirement are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. 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.

Baron New Asia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baron New Asia has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Baron New 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 Baron New

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

The idea behind Fidelity Managed Retirement and Baron New Asia 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.