Correlation Between Applied Finance and Fidelity Flex
Can any of the company-specific risk be diversified away by investing in both Applied Finance and Fidelity Flex 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 Applied Finance and Fidelity Flex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Finance Explorer and Fidelity Flex Servative, you can compare the effects of market volatilities on Applied Finance and Fidelity Flex 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 Applied Finance with a short position of Fidelity Flex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Fidelity Flex.
Diversification Opportunities for Applied Finance and Fidelity Flex
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Applied and Fidelity is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Fidelity Flex Servative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Flex Servative and Applied Finance 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 Applied Finance Explorer are associated (or correlated) with Fidelity Flex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Flex Servative has no effect on the direction of Applied Finance i.e., Applied Finance and Fidelity Flex go up and down completely randomly.
Pair Corralation between Applied Finance and Fidelity Flex
Assuming the 90 days horizon Applied Finance Explorer is expected to generate 16.04 times more return on investment than Fidelity Flex. However, Applied Finance is 16.04 times more volatile than Fidelity Flex Servative. It trades about 0.04 of its potential returns per unit of risk. Fidelity Flex Servative is currently generating about 0.19 per unit of risk. If you would invest 1,762 in Applied Finance Explorer on March 23, 2025 and sell it today you would earn a total of 358.00 from holding Applied Finance Explorer or generate 20.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Finance Explorer vs. Fidelity Flex Servative
Performance |
| Timeline |
| Applied Finance Explorer |
| Fidelity Flex Servative |
Applied Finance and Fidelity Flex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Finance and Fidelity Flex
The main advantage of trading using opposite Applied Finance and Fidelity Flex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance position performs unexpectedly, Fidelity Flex 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 Flex will offset losses from the drop in Fidelity Flex's long position.| Applied Finance vs. Thrivent Small Cap | Applied Finance vs. Applied Finance Select | Applied Finance vs. Parnassus Endeavor Fund | Applied Finance vs. Queens Road Small |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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