Correlation Between SPACE and Fidelity Short

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

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

Diversification Opportunities for SPACE and Fidelity Short

-0.43

Correlation Coefficient

SPACE  Fidelity Short

Very good diversification

The 3 months correlation between SPACE and Fidelity is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding SPACE 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 SPACE 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 SPACE 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 SPACE i.e., SPACE and Fidelity Short go up and down completely randomly.

Pair Corralation between SPACE and Fidelity Short

Assuming the 90 days horizon SPACE is expected to generate 36.29 times more return on investment than Fidelity Short. However, SPACE is 36.29 times more volatile than Fidelity Short Term Bond. It trades about 0.2 of its potential returns per unit of risk. Fidelity Short Term Bond is currently generating about 0.0 per unit of risk. If you would invest  34.00  in SPACE on September 3, 2024 and sell it today you would earn a total of  25.00  from holding SPACE or generate 73.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

SPACE  vs.  Fidelity Short Term Bond

SPACE

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPACE are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, SPACE exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 basic indicators, Fidelity Short is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SPACE and Fidelity Short

The main advantage of trading using opposite SPACE and Fidelity Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPACE 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 SPACE 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.