Correlation Between Fidelity Total and SPDR Barclays
Can any of the company-specific risk be diversified away by investing in both Fidelity Total and SPDR Barclays 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 Total and SPDR Barclays into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Total Bond and SPDR Barclays Intermediate, you can compare the effects of market volatilities on Fidelity Total and SPDR Barclays 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 Total with a short position of SPDR Barclays. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Total and SPDR Barclays.
Diversification Opportunities for Fidelity Total and SPDR Barclays
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and SPDR is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Total Bond and SPDR Barclays Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Barclays Interm and Fidelity Total 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 Total Bond are associated (or correlated) with SPDR Barclays. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Barclays Interm has no effect on the direction of Fidelity Total i.e., Fidelity Total and SPDR Barclays go up and down completely randomly.
Pair Corralation between Fidelity Total and SPDR Barclays
Given the investment horizon of 90 days Fidelity Total Bond is expected to under-perform the SPDR Barclays. In addition to that, Fidelity Total is 1.56 times more volatile than SPDR Barclays Intermediate. It trades about -0.14 of its total potential returns per unit of risk. SPDR Barclays Intermediate is currently generating about -0.12 per unit of volatility. If you would invest 3,244 in SPDR Barclays Intermediate on January 31, 2024 and sell it today you would lose (22.00) from holding SPDR Barclays Intermediate or give up 0.68% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Fidelity Total Bond vs. SPDR Barclays Intermediate
Performance |
Timeline |
Fidelity Total Bond |
SPDR Barclays Interm |
Fidelity Total and SPDR Barclays Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fidelity Total and SPDR Barclays
The main advantage of trading using opposite Fidelity Total and SPDR Barclays positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Total position performs unexpectedly, SPDR Barclays 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 SPDR Barclays will offset losses from the drop in SPDR Barclays' long position.Fidelity Total vs. Fidelity Corporate Bond | Fidelity Total vs. Fidelity Limited Term | Fidelity Total vs. Fidelity High Yield | Fidelity Total vs. Fidelity High Dividend |
SPDR Barclays vs. Fidelity Limited Term | SPDR Barclays vs. Fidelity Total Bond | SPDR Barclays vs. Fidelity High Yield | SPDR Barclays vs. HUMANA INC |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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