Correlation Between Fidelity Leveraged and Hodges Fund

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

By analyzing existing cross correlation between Fidelity Leveraged Pany and Hodges Fund Retail, you can compare the effects of market volatilities on Fidelity Leveraged and Hodges Fund 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 Leveraged with a short position of Hodges Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Leveraged and Hodges Fund.

Diversification Opportunities for Fidelity Leveraged and Hodges Fund

0.77

Correlation Coefficient

Fidelity Leveraged  Hodges Fund

Poor diversification

The 3 months correlation between Fidelity and Hodges is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Leveraged Pany and Hodges Fund Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hodges Fund Retail and Fidelity Leveraged 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 Leveraged Pany are associated (or correlated) with Hodges Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hodges Fund Retail has no effect on the direction of Fidelity Leveraged i.e., Fidelity Leveraged and Hodges Fund go up and down completely randomly.

Pair Corralation between Fidelity Leveraged and Hodges Fund

Assuming the 90 days horizon Fidelity Leveraged is expected to generate 3.46 times less return on investment than Hodges Fund. In addition to that, Fidelity Leveraged is 1.19 times more volatile than Hodges Fund Retail. It trades about 0.08 of its total potential returns per unit of risk. Hodges Fund Retail is currently generating about 0.33 per unit of volatility. If you would invest  6,122  in Hodges Fund Retail on September 5, 2024 and sell it today you would earn a total of  1,860  from holding Hodges Fund Retail or generate 30.38% return on investment over 90 days.

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

Fidelity Leveraged Pany  vs.  Hodges Fund Retail

Fidelity Leveraged Pany

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Leveraged Pany are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Fidelity Leveraged may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hodges Fund Retail

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hodges Fund Retail are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Hodges Fund showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidelity Leveraged and Hodges Fund

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

The idea behind Fidelity Leveraged Pany and Hodges Fund Retail 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.