Correlation Between Ambrus Core and Fidelity New

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

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

Diversification Opportunities for Ambrus Core and Fidelity New

0.8

Correlation Coefficient

Ambrus Core  Fidelity New

Very poor diversification

The 3 months correlation between Ambrus and Fidelity is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Ambrus Core Bond and Fidelity New Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity New Markets and Ambrus 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 Ambrus Core Bond are associated (or correlated) with Fidelity New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity New Markets has no effect on the direction of Ambrus Core i.e., Ambrus Core and Fidelity New go up and down completely randomly.

Pair Corralation between Ambrus Core and Fidelity New

Assuming the 90 days horizon Ambrus Core Bond is expected to under-perform the Fidelity New. But the mutual fund apears to be less risky and, when comparing its historical volatility, Ambrus Core Bond is 1.67 times less risky than Fidelity New. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Fidelity New Markets is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,292  in Fidelity New Markets on September 17, 2024 and sell it today you would lose (4.00) from holding Fidelity New Markets or give up 0.31% of portfolio value over 90 days.

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

Ambrus Core Bond  vs.  Fidelity New Markets

Ambrus Core Bond

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fidelity New Markets

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Ambrus Core and Fidelity New

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

The idea behind Ambrus Core Bond and Fidelity New Markets 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.