Correlation Between Fidelity Managed and Fidelity Convertible

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

Diversification Opportunities for Fidelity Managed and Fidelity Convertible

-0.31

Correlation Coefficient

Fidelity Managed  Fidelity Convertible

Very good diversification

The 3 months correlation between Fidelity and Fidelity is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Managed Retirement and Fidelity Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Convertible 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 Fidelity Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Convertible has no effect on the direction of Fidelity Managed i.e., Fidelity Managed and Fidelity Convertible go up and down completely randomly.

Pair Corralation between Fidelity Managed and Fidelity Convertible

Assuming the 90 days horizon Fidelity Managed is expected to generate 13.19 times less return on investment than Fidelity Convertible. But when comparing it to its historical volatility, Fidelity Managed Retirement is 2.02 times less risky than Fidelity Convertible. It trades about 0.06 of its potential returns per unit of risk. Fidelity Vertible Securities is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  3,337  in Fidelity Vertible Securities on September 3, 2024 and sell it today you would earn a total of  466.00  from holding Fidelity Vertible Securities or generate 13.96% return on investment over 90 days.

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

Fidelity Managed Retirement  vs.  Fidelity Vertible Securities

Fidelity Managed Ret

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Managed Retirement are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, Fidelity Managed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Convertible

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Vertible Securities are ranked lower than 30 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity Convertible showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidelity Managed and Fidelity Convertible

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

The idea behind Fidelity Managed Retirement and Fidelity Vertible Securities 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.