Correlation Between Fidelity Puritan and Sp 500

Can any of the company-specific risk be diversified away by investing in both Fidelity Puritan and Sp 500 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 Puritan and Sp 500 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fidelity Puritan Fund and Sp 500 Equal, you can compare the effects of market volatilities on Fidelity Puritan and Sp 500 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 Puritan with a short position of Sp 500. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Puritan and Sp 500.

Diversification Opportunities for Fidelity Puritan and Sp 500

0.93

Correlation Coefficient

Fidelity Puritan  Sp 500

Almost no diversification

The 3 months correlation between Fidelity and INDEX is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Puritan Fund and Sp 500 Equal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp 500 Equal and Fidelity Puritan 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 Puritan Fund are associated (or correlated) with Sp 500. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp 500 Equal has no effect on the direction of Fidelity Puritan i.e., Fidelity Puritan and Sp 500 go up and down completely randomly.

Pair Corralation between Fidelity Puritan and Sp 500

Assuming the 90 days horizon Fidelity Puritan Fund is expected to under-perform the Sp 500. But the mutual fund apears to be less risky and, when comparing its historical volatility, Fidelity Puritan Fund is 1.11 times less risky than Sp 500. The mutual fund trades about -0.22 of its potential returns per unit of risk. The Sp 500 Equal is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  4,975  in Sp 500 Equal on February 1, 2024 and sell it today you would lose (119.00) from holding Sp 500 Equal or give up 2.39% of portfolio value over 90 days.

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

Fidelity Puritan Fund  vs.  Sp 500 Equal

Fidelity Puritan

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Puritan Fund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, Fidelity Puritan is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sp 500 Equal

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sp 500 Equal are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Sp 500 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fidelity Puritan and Sp 500

The main advantage of trading using opposite Fidelity Puritan and Sp 500 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Puritan position performs unexpectedly, Sp 500 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 Sp 500 will offset losses from the drop in Sp 500's long position.

The idea behind Fidelity Puritan Fund and Sp 500 Equal 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.