Correlation Between New Economy and Fidelity Blue
Can any of the company-specific risk be diversified away by investing in both New Economy and Fidelity Blue 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 New Economy and Fidelity Blue into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Economy Fund and Fidelity Blue Chip, you can compare the effects of market volatilities on New Economy and Fidelity Blue 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 New Economy with a short position of Fidelity Blue. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Economy and Fidelity Blue.
Diversification Opportunities for New Economy and Fidelity Blue
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between New and Fidelity is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding New Economy Fund and Fidelity Blue Chip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Blue Chip and New Economy 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 New Economy Fund are associated (or correlated) with Fidelity Blue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Blue Chip has no effect on the direction of New Economy i.e., New Economy and Fidelity Blue go up and down completely randomly.
Pair Corralation between New Economy and Fidelity Blue
Assuming the 90 days horizon New Economy is expected to generate 1.45 times less return on investment than Fidelity Blue. But when comparing it to its historical volatility, New Economy Fund is 1.32 times less risky than Fidelity Blue. It trades about 0.09 of its potential returns per unit of risk. Fidelity Blue Chip is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 15,337 in Fidelity Blue Chip on January 24, 2024 and sell it today you would earn a total of 3,476 from holding Fidelity Blue Chip or generate 22.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Economy Fund vs. Fidelity Blue Chip
Performance |
| Timeline |
| New Economy Fund |
| Fidelity Blue Chip |
New Economy and Fidelity Blue Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Economy and Fidelity Blue
The main advantage of trading using opposite New Economy and Fidelity Blue positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Economy position performs unexpectedly, Fidelity Blue 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 Blue will offset losses from the drop in Fidelity Blue's long position.| New Economy vs. Income Fund Of | New Economy vs. New World Fund | New Economy vs. American Mutual Fund | New Economy vs. American Mutual Fund |
| Fidelity Blue vs. Fidelity Freedom 2015 | Fidelity Blue vs. Fidelity Puritan Fund | Fidelity Blue vs. Fidelity Puritan Fund | Fidelity Blue vs. Fidelity Pennsylvania Municipal |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |