Correlation Between Fidelity Quality and Fidelity Sustainable

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

By analyzing existing cross correlation between Fidelity Quality Income and Fidelity Sustainable Global, you can compare the effects of market volatilities on Fidelity Quality and Fidelity Sustainable 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 Quality with a short position of Fidelity Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Quality and Fidelity Sustainable.

Diversification Opportunities for Fidelity Quality and Fidelity Sustainable

0.19

Correlation Coefficient

Fidelity Quality  Fidelity Sustainable

Average diversification

The 3 months correlation between Fidelity and Fidelity is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Quality Income and Fidelity Sustainable Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Sustainable and Fidelity Quality 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 Quality Income are associated (or correlated) with Fidelity Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Sustainable has no effect on the direction of Fidelity Quality i.e., Fidelity Quality and Fidelity Sustainable go up and down completely randomly.

Pair Corralation between Fidelity Quality and Fidelity Sustainable

Assuming the 90 days trading horizon Fidelity Quality is expected to generate 1301.9 times less return on investment than Fidelity Sustainable. But when comparing it to its historical volatility, Fidelity Quality Income is 616.31 times less risky than Fidelity Sustainable. It trades about 0.2 of its potential returns per unit of risk. Fidelity Sustainable Global is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest  41,260  in Fidelity Sustainable Global on September 15, 2024 and sell it today you would earn a total of  700.00  from holding Fidelity Sustainable Global or generate 1.7% return on investment over 90 days.

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

Fidelity Quality Income  vs.  Fidelity Sustainable Global

Fidelity Quality Income

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Quality Income are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Fidelity Quality may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fidelity Sustainable

Risk-Adjusted Performance

32 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Sustainable Global are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Fidelity Sustainable unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidelity Quality and Fidelity Sustainable

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

The idea behind Fidelity Quality Income and Fidelity Sustainable Global 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.