Correlation Between Fidelity 500 and Edwards Lifesciences
Can any of the company-specific risk be diversified away by investing in both Fidelity 500 and Edwards Lifesciences 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 500 and Edwards Lifesciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity 500 Index and Edwards Lifesciences Corp, you can compare the effects of market volatilities on Fidelity 500 and Edwards Lifesciences 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 500 with a short position of Edwards Lifesciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity 500 and Edwards Lifesciences.
Diversification Opportunities for Fidelity 500 and Edwards Lifesciences
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Edwards is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity 500 Index and Edwards Lifesciences Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edwards Lifesciences Corp and Fidelity 500 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 500 Index are associated (or correlated) with Edwards Lifesciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edwards Lifesciences Corp has no effect on the direction of Fidelity 500 i.e., Fidelity 500 and Edwards Lifesciences go up and down completely randomly.
Pair Corralation between Fidelity 500 and Edwards Lifesciences
Assuming the 90 days horizon Fidelity 500 Index is expected to generate 0.41 times more return on investment than Edwards Lifesciences. However, Fidelity 500 Index is 2.44 times less risky than Edwards Lifesciences. It trades about 0.13 of its potential returns per unit of risk. Edwards Lifesciences Corp is currently generating about 0.01 per unit of risk. If you would invest 13,925 in Fidelity 500 Index on January 20, 2024 and sell it today you would earn a total of 3,480 from holding Fidelity 500 Index or generate 24.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Fidelity 500 Index vs. Edwards Lifesciences Corp
Performance |
| Timeline |
| Fidelity 500 Index |
| Edwards Lifesciences Corp |
Fidelity 500 and Edwards Lifesciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity 500 and Edwards Lifesciences
The main advantage of trading using opposite Fidelity 500 and Edwards Lifesciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity 500 position performs unexpectedly, Edwards Lifesciences 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 Edwards Lifesciences will offset losses from the drop in Edwards Lifesciences' long position.| Fidelity 500 vs. Fidelity Freedom 2015 | Fidelity 500 vs. Fidelity Puritan Fund | Fidelity 500 vs. Fidelity Pennsylvania Municipal | Fidelity 500 vs. Fidelity Freedom Index |
| Edwards Lifesciences vs. Agilent Technologies | Edwards Lifesciences vs. Illumina | Edwards Lifesciences vs. Waters | Edwards Lifesciences vs. Thermo Fisher Scientific |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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