Correlation Between Fidelity Bond and Fidelity Short

Can any of the company-specific risk be diversified away by investing in both Fidelity Bond and Fidelity Short 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 Bond and Fidelity Short 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 Treasury, you can compare the effects of market volatilities on Fidelity Bond and Fidelity Short 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 Bond with a short position of Fidelity Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Bond and Fidelity Short.

Diversification Opportunities for Fidelity Bond and Fidelity Short

0.98

Correlation Coefficient

Fidelity Bond  Fidelity Short

Almost no diversification

The 3 months correlation between Fidelity and Fidelity is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Bond Index and Fidelity Short Term Treasury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Short Term and Fidelity Bond 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. 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 Bond i.e., Fidelity Bond and Fidelity Short go up and down completely randomly.

Pair Corralation between Fidelity Bond and Fidelity Short

Assuming the 90 days horizon Fidelity Bond Index is expected to generate 2.36 times more return on investment than Fidelity Short. However, Fidelity Bond is 2.36 times more volatile than Fidelity Short Term Treasury. It trades about 0.11 of its potential returns per unit of risk. Fidelity Short Term Treasury is currently generating about 0.07 per unit of risk. If you would invest  1,024  in Fidelity Bond Index on September 16, 2024 and sell it today you would earn a total of  7.00  from holding Fidelity Bond Index or generate 0.68% return on investment over 90 days.

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

Fidelity Bond Index  vs.  Fidelity Short Term Treasury

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 Bond 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 Treasury has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Fidelity Short 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 Bond and Fidelity Short

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

The idea behind Fidelity Bond Index and Fidelity Short Term Treasury 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.