Correlation Between New Economy and Fidelity Stock
Can any of the company-specific risk be diversified away by investing in both New Economy and Fidelity Stock 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 Stock 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 Stock Selector, you can compare the effects of market volatilities on New Economy and Fidelity Stock 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 Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Economy and Fidelity Stock.
Diversification Opportunities for New Economy and Fidelity Stock
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 Stock Selector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Stock Selector 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 Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Stock Selector has no effect on the direction of New Economy i.e., New Economy and Fidelity Stock go up and down completely randomly.
Pair Corralation between New Economy and Fidelity Stock
Assuming the 90 days horizon New Economy Fund is expected to generate 1.16 times more return on investment than Fidelity Stock. However, New Economy is 1.16 times more volatile than Fidelity Stock Selector. It trades about -0.07 of its potential returns per unit of risk. Fidelity Stock Selector is currently generating about -0.11 per unit of risk. If you would invest 5,879 in New Economy Fund on January 17, 2024 and sell it today you would lose (77.00) from holding New Economy Fund or give up 1.31% of portfolio value 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 Stock Selector
Performance |
| Timeline |
| New Economy Fund |
| Fidelity Stock Selector |
New Economy and Fidelity Stock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Economy and Fidelity Stock
The main advantage of trading using opposite New Economy and Fidelity Stock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Economy position performs unexpectedly, Fidelity Stock 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 Stock will offset losses from the drop in Fidelity Stock'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 Stock vs. Fidelity Capital Income | Fidelity Stock vs. Gold Portfolio Gold | Fidelity Stock vs. Semiconductors Portfolio Semiconductors | Fidelity Stock vs. Fidelity Select Portfolios |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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