Correlation Between Fidelity Stock and Fidelity Flex

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

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

Diversification Opportunities for Fidelity Stock and Fidelity Flex

0.97

Correlation Coefficient

Fidelity Stock  Fidelity Flex

Almost no diversification

The 3 months correlation between Fidelity and Fidelity is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Stock Selector and Fidelity Flex Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Flex Mid and Fidelity Stock 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 Stock Selector are associated (or correlated) with Fidelity Flex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Flex Mid has no effect on the direction of Fidelity Stock i.e., Fidelity Stock and Fidelity Flex go up and down completely randomly.

Pair Corralation between Fidelity Stock and Fidelity Flex

Assuming the 90 days horizon Fidelity Stock Selector is expected to generate 1.66 times more return on investment than Fidelity Flex. However, Fidelity Stock is 1.66 times more volatile than Fidelity Flex Mid. It trades about 0.2 of its potential returns per unit of risk. Fidelity Flex Mid is currently generating about 0.33 per unit of risk. If you would invest  3,933  in Fidelity Stock Selector on September 6, 2024 and sell it today you would earn a total of  243.00  from holding Fidelity Stock Selector or generate 6.18% return on investment over 90 days.

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

Fidelity Stock Selector  vs.  Fidelity Flex Mid

Fidelity Stock Selector

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Stock Selector are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Fidelity Stock showed solid returns over the last few months and may actually be approaching a breakup point.

Fidelity Flex Mid

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Flex Mid are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity Flex showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidelity Stock and Fidelity Flex

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

The idea behind Fidelity Stock Selector and Fidelity Flex Mid 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.