Correlation Between Fidelity Asset and Multimanager Lifestyle

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Can any of the company-specific risk be diversified away by investing in both Fidelity Asset and Multimanager Lifestyle 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 Asset and Multimanager Lifestyle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Asset Manager and Multimanager Lifestyle Moderate, you can compare the effects of market volatilities on Fidelity Asset and Multimanager Lifestyle 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 Asset with a short position of Multimanager Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Asset and Multimanager Lifestyle.

Diversification Opportunities for Fidelity Asset and Multimanager Lifestyle

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Fidelity and Multimanager is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding FIDELITY ASSET MANAGER and MULTIMANAGER LIFESTYLE MODERAT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multimanager Lifestyle and Fidelity Asset 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 Asset Manager are associated (or correlated) with Multimanager Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multimanager Lifestyle has no effect on the direction of Fidelity Asset i.e., Fidelity Asset and Multimanager Lifestyle go up and down completely randomly.

Pair Corralation between Fidelity Asset and Multimanager Lifestyle

If you would invest  1,984  in Fidelity Asset Manager on December 29, 2023 and sell it today you would earn a total of  31.00  from holding Fidelity Asset Manager or generate 1.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

FIDELITY ASSET MANAGER  vs.  MULTIMANAGER LIFESTYLE MODERAT

 Performance 
       Timeline  
Fidelity Asset Manager 

Risk-Adjusted Performance

10 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Asset Manager are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Fidelity Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Multimanager Lifestyle 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Multimanager Lifestyle Moderate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Multimanager Lifestyle is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Asset and Multimanager Lifestyle Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fidelity Asset and Multimanager Lifestyle

The main advantage of trading using opposite Fidelity Asset and Multimanager Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Asset position performs unexpectedly, Multimanager Lifestyle 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 Multimanager Lifestyle will offset losses from the drop in Multimanager Lifestyle's long position.
The idea behind Fidelity Asset Manager and Multimanager Lifestyle Moderate 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.
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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