Correlation Between Fidelity New and Amana Participation
Can any of the company-specific risk be diversified away by investing in both Fidelity New and Amana Participation 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 New and Amana Participation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity New Markets and Amana Participation Fund, you can compare the effects of market volatilities on Fidelity New and Amana Participation 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 New with a short position of Amana Participation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity New and Amana Participation.
Diversification Opportunities for Fidelity New and Amana Participation
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fidelity and Amana is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity New Markets and Amana Participation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amana Participation and Fidelity New 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 New Markets are associated (or correlated) with Amana Participation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amana Participation has no effect on the direction of Fidelity New i.e., Fidelity New and Amana Participation go up and down completely randomly.
Pair Corralation between Fidelity New and Amana Participation
Assuming the 90 days horizon Fidelity New Markets is expected to generate 1.8 times more return on investment than Amana Participation. However, Fidelity New is 1.8 times more volatile than Amana Participation Fund. It trades about 0.08 of its potential returns per unit of risk. Amana Participation Fund is currently generating about 0.04 per unit of risk. If you would invest 1,235 in Fidelity New Markets on March 8, 2024 and sell it today you would earn a total of 22.00 from holding Fidelity New Markets or generate 1.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Fidelity New Markets vs. Amana Participation Fund
Performance |
Timeline |
Fidelity New Markets |
Amana Participation |
Fidelity New and Amana Participation Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fidelity New and Amana Participation
The main advantage of trading using opposite Fidelity New and Amana Participation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity New position performs unexpectedly, Amana Participation 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 Amana Participation will offset losses from the drop in Amana Participation's long position.The idea behind Fidelity New Markets and Amana Participation Fund 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.Amana Participation vs. Gavekal Kl Allocation | Amana Participation vs. Rational Strategic Allocation | Amana Participation vs. Dodge Cox Stock | Amana Participation vs. T Rowe Price |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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