Correlation Between IShares Core and Fidelity Blue

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

By analyzing existing cross correlation between iShares Core SP and Fidelity Blue Chip, you can compare the effects of market volatilities on IShares Core and Fidelity Blue 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 IShares Core with a short position of Fidelity Blue. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Fidelity Blue.

Diversification Opportunities for IShares Core and Fidelity Blue

1.0

Correlation Coefficient

IShares Core  Fidelity Blue

No risk reduction

The 3 months correlation between IShares and Fidelity is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Fidelity Blue Chip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Blue Chip and IShares Core 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 iShares Core SP are associated (or correlated) with Fidelity Blue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Blue Chip has no effect on the direction of IShares Core i.e., IShares Core and Fidelity Blue go up and down completely randomly.

Pair Corralation between IShares Core and Fidelity Blue

Given the investment horizon of 90 days IShares Core is expected to generate 1.21 times less return on investment than Fidelity Blue. But when comparing it to its historical volatility, iShares Core SP is 1.11 times less risky than Fidelity Blue. It trades about 0.19 of its potential returns per unit of risk. Fidelity Blue Chip is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  4,015  in Fidelity Blue Chip on September 2, 2024 and sell it today you would earn a total of  586.00  from holding Fidelity Blue Chip or generate 14.6% return on investment over 90 days.

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

iShares Core SP  vs.  Fidelity Blue Chip

iShares Core SP

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, IShares Core may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fidelity Blue Chip

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Blue Chip are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal fundamental indicators, Fidelity Blue reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Core and Fidelity Blue

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

The idea behind iShares Core SP and Fidelity Blue Chip 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.