Correlation Between Fidelity Series and Oakmark Bond

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

Diversification Opportunities for Fidelity Series and Oakmark Bond

-0.56

Correlation Coefficient

Fidelity Series  Oakmark Bond

Excellent diversification

The 3 months correlation between Fidelity and Oakmark is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Series 1000 and Oakmark Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark Bond 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 Oakmark Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakmark Bond has no effect on the direction of Fidelity Series i.e., Fidelity Series and Oakmark Bond go up and down completely randomly.

Pair Corralation between Fidelity Series and Oakmark Bond

Assuming the 90 days horizon Fidelity Series 1000 is expected to generate 2.36 times more return on investment than Oakmark Bond. However, Fidelity Series is 2.36 times more volatile than Oakmark Bond. It trades about 0.14 of its potential returns per unit of risk. Oakmark Bond is currently generating about -0.08 per unit of risk. If you would invest  1,658  in Fidelity Series 1000 on September 12, 2024 and sell it today you would earn a total of  92.00  from holding Fidelity Series 1000 or generate 5.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Fidelity Series 1000  vs.  Oakmark Bond

Fidelity Series 1000

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Series 1000 are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Series is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Oakmark Bond

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Fidelity Series 1000 and Oakmark Bond 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.