Correlation Between Fidelity Managed and Dimensional 2065

Can any of the company-specific risk be diversified away by investing in both Fidelity Managed and Dimensional 2065 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 Dimensional 2065 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 Dimensional 2065 Target, you can compare the effects of market volatilities on Fidelity Managed and Dimensional 2065 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 Dimensional 2065. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Managed and Dimensional 2065.

Diversification Opportunities for Fidelity Managed and Dimensional 2065

0.33

Correlation Coefficient

Fidelity Managed  Dimensional 2065

Weak diversification

The 3 months correlation between Fidelity and Dimensional is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Managed Retirement and Dimensional 2065 Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional 2065 Target 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 Dimensional 2065. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional 2065 Target has no effect on the direction of Fidelity Managed i.e., Fidelity Managed and Dimensional 2065 go up and down completely randomly.

Pair Corralation between Fidelity Managed and Dimensional 2065

Assuming the 90 days horizon Fidelity Managed is expected to generate 1.12 times less return on investment than Dimensional 2065. But when comparing it to its historical volatility, Fidelity Managed Retirement is 1.59 times less risky than Dimensional 2065. It trades about 0.26 of its potential returns per unit of risk. Dimensional 2065 Target is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,522  in Dimensional 2065 Target on September 13, 2024 and sell it today you would earn a total of  24.00  from holding Dimensional 2065 Target or generate 1.58% return on investment over 90 days.

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

Fidelity Managed Retirement  vs.  Dimensional 2065 Target

Fidelity Managed Ret

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Managed Retirement are ranked lower than 3 (%) 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.

Dimensional 2065 Target

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dimensional 2065 Target are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Dimensional 2065 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 Dimensional 2065

The main advantage of trading using opposite Fidelity Managed and Dimensional 2065 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Managed position performs unexpectedly, Dimensional 2065 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 Dimensional 2065 will offset losses from the drop in Dimensional 2065's long position.

The idea behind Fidelity Managed Retirement and Dimensional 2065 Target 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.