Correlation Between Fidelity Equity-income and Fidelity Puritan
Can any of the company-specific risk be diversified away by investing in both Fidelity Equity-income and Fidelity Puritan 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 Equity-income and Fidelity Puritan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Equity Income Fund and Fidelity Puritan Fund, you can compare the effects of market volatilities on Fidelity Equity-income and Fidelity Puritan 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 Equity-income with a short position of Fidelity Puritan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Equity-income and Fidelity Puritan.
Diversification Opportunities for Fidelity Equity-income and Fidelity Puritan
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Fidelity is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Equity Income Fund and Fidelity Puritan Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Puritan and Fidelity Equity-income 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 Equity Income Fund are associated (or correlated) with Fidelity Puritan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Puritan has no effect on the direction of Fidelity Equity-income i.e., Fidelity Equity-income and Fidelity Puritan go up and down completely randomly.
Pair Corralation between Fidelity Equity-income and Fidelity Puritan
Assuming the 90 days horizon Fidelity Equity-income is expected to generate 1.49 times less return on investment than Fidelity Puritan. In addition to that, Fidelity Equity-income is 1.26 times more volatile than Fidelity Puritan Fund. It trades about 0.05 of its total potential returns per unit of risk. Fidelity Puritan Fund is currently generating about 0.1 per unit of volatility. If you would invest 2,372 in Fidelity Puritan Fund on March 28, 2025 and sell it today you would earn a total of 168.00 from holding Fidelity Puritan Fund or generate 7.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Equity Income Fund vs. Fidelity Puritan Fund
Performance |
| Timeline |
| Fidelity Equity Income |
| Fidelity Puritan |
Fidelity Equity-income and Fidelity Puritan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Equity-income and Fidelity Puritan
The main advantage of trading using opposite Fidelity Equity-income and Fidelity Puritan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Equity-income position performs unexpectedly, Fidelity Puritan 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 Puritan will offset losses from the drop in Fidelity Puritan's long position.The idea behind Fidelity Equity Income Fund and Fidelity Puritan Fund 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.
| Fidelity Puritan vs. Fidelity Balanced Fund | Fidelity Puritan vs. Fidelity Magellan Fund | Fidelity Puritan vs. Fidelity Growth Income | Fidelity Puritan vs. Fidelity Equity Income Fund |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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