Correlation Between FT Cboe and Fidelity Large

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

By analyzing existing cross correlation between FT Cboe Vest and Fidelity Large Cap, you can compare the effects of market volatilities on FT Cboe and Fidelity Large 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 FT Cboe with a short position of Fidelity Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Cboe and Fidelity Large.

Diversification Opportunities for FT Cboe and Fidelity Large

0.98

Correlation Coefficient

FT Cboe  Fidelity Large

Almost no diversification

The 3 months correlation between KNG and Fidelity is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding FT Cboe Vest and Fidelity Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Large Cap and FT Cboe 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 FT Cboe Vest are associated (or correlated) with Fidelity Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Large Cap has no effect on the direction of FT Cboe i.e., FT Cboe and Fidelity Large go up and down completely randomly.

Pair Corralation between FT Cboe and Fidelity Large

Considering the 90-day investment horizon FT Cboe Vest is expected to generate 0.76 times more return on investment than Fidelity Large. However, FT Cboe Vest is 1.31 times less risky than Fidelity Large. It trades about -0.29 of its potential returns per unit of risk. Fidelity Large Cap is currently generating about -0.24 per unit of risk. If you would invest  5,312  in FT Cboe Vest on February 1, 2024 and sell it today you would lose (186.00) from holding FT Cboe Vest or give up 3.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.65%
Values	Daily Returns

FT Cboe Vest  vs.  Fidelity Large Cap

FT Cboe Vest

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FT Cboe Vest are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, FT Cboe is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Fidelity Large Cap

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Large Cap are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FT Cboe and Fidelity Large

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

The idea behind FT Cboe Vest and Fidelity Large Cap 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.