Correlation Between Fidelity Series and Bridge Builder

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

By analyzing existing cross correlation between Fidelity Series 1000 and Bridge Builder Trust, you can compare the effects of market volatilities on Fidelity Series and Bridge Builder 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 Series with a short position of Bridge Builder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Series and Bridge Builder.

Diversification Opportunities for Fidelity Series and Bridge Builder

0.94

Correlation Coefficient

Fidelity Series  Bridge Builder

Almost no diversification

The 3 months correlation between Fidelity and Bridge is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Series 1000 and Bridge Builder Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridge Builder Trust and Fidelity Series 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 Series 1000 are associated (or correlated) with Bridge Builder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridge Builder Trust has no effect on the direction of Fidelity Series i.e., Fidelity Series and Bridge Builder go up and down completely randomly.

Pair Corralation between Fidelity Series and Bridge Builder

Assuming the 90 days horizon Fidelity Series is expected to generate 1.53 times less return on investment than Bridge Builder. But when comparing it to its historical volatility, Fidelity Series 1000 is 1.02 times less risky than Bridge Builder. It trades about 0.08 of its potential returns per unit of risk. Bridge Builder Trust is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  961.00  in Bridge Builder Trust on September 5, 2024 and sell it today you would earn a total of  575.00  from holding Bridge Builder Trust or generate 59.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.8%
Values	Daily Returns

Fidelity Series 1000  vs.  Bridge Builder Trust

Fidelity Series 1000

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Series 1000 are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity Series may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bridge Builder Trust

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bridge Builder Trust are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Bridge Builder may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fidelity Series and Bridge Builder

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

The idea behind Fidelity Series 1000 and Bridge Builder Trust 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.