Correlation Between Fidelity and Fidelity Short-term

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

By analyzing existing cross correlation between Fidelity Bond Index and Fidelity Short Term Bond, you can compare the effects of market volatilities on Fidelity and Fidelity Short-term 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 with a short position of Fidelity Short-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity and Fidelity Short-term.

Diversification Opportunities for Fidelity and Fidelity Short-term

0.76

Correlation Coefficient

Fidelity  Fidelity Short-term

Poor diversification

The 3 months correlation between Fidelity and Fidelity is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Bond Index and Fidelity Short Term Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Short Term and Fidelity 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 Bond Index are associated (or correlated) with Fidelity Short-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Short Term has no effect on the direction of Fidelity i.e., Fidelity and Fidelity Short-term go up and down completely randomly.

Pair Corralation between Fidelity and Fidelity Short-term

Assuming the 90 days horizon Fidelity is expected to generate 1.5 times less return on investment than Fidelity Short-term. In addition to that, Fidelity is 2.84 times more volatile than Fidelity Short Term Bond. It trades about 0.03 of its total potential returns per unit of risk. Fidelity Short Term Bond is currently generating about 0.13 per unit of volatility. If you would invest  771.00  in Fidelity Short Term Bond on September 5, 2024 and sell it today you would earn a total of  74.00  from holding Fidelity Short Term Bond or generate 9.6% return on investment over 90 days.

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

Fidelity Bond Index  vs.  Fidelity Short Term Bond

Fidelity Bond Index

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Bond Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Fidelity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Short Term

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Short Term Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Fidelity Short-term 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 and Fidelity Short-term

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

The idea behind Fidelity Bond Index and Fidelity Short Term 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.