Correlation Between Fidelity LongShort and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Fidelity LongShort and Dow Jones 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 LongShort and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity LongShort Alternative and Dow Jones Industrial, you can compare the effects of market volatilities on Fidelity LongShort and Dow Jones 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 LongShort with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity LongShort and Dow Jones.
Diversification Opportunities for Fidelity LongShort and Dow Jones
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Dow is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity LongShort Alternative and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Fidelity LongShort 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 LongShort Alternative are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Fidelity LongShort i.e., Fidelity LongShort and Dow Jones go up and down completely randomly.
Pair Corralation between Fidelity LongShort and Dow Jones
Assuming the 90 days trading horizon Fidelity LongShort Alternative is expected to generate 0.7 times more return on investment than Dow Jones. However, Fidelity LongShort Alternative is 1.44 times less risky than Dow Jones. It trades about 0.31 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.2 per unit of risk. If you would invest 1,089 in Fidelity LongShort Alternative on September 8, 2024 and sell it today you would earn a total of 112.00 from holding Fidelity LongShort Alternative or generate 10.28% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Fidelity LongShort Alternative vs. Dow Jones Industrial
Performance |
Timeline |
Fidelity LongShort and Dow Jones Volatility Contrast
Predicted Return Density |
Returns |
Fidelity LongShort Alternative
Pair trading matchups for Fidelity LongShort
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Fidelity LongShort and Dow Jones
The main advantage of trading using opposite Fidelity LongShort and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity LongShort position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.Fidelity LongShort vs. Fidelity Global Value | Fidelity LongShort vs. Fidelity Momentum ETF | Fidelity LongShort vs. Fidelity Canadian High | Fidelity LongShort vs. Fidelity All in One Balanced |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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