Correlation Between Fidelity Select and Selected American
Can any of the company-specific risk be diversified away by investing in both Fidelity Select and Selected American 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 Select and Selected American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Select Semiconductors and Selected American Shares, you can compare the effects of market volatilities on Fidelity Select and Selected American 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 Select with a short position of Selected American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Select and Selected American.
Diversification Opportunities for Fidelity Select and Selected American
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Selected is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Select Semiconductors and Selected American Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selected American Shares and Fidelity Select 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 Select Semiconductors are associated (or correlated) with Selected American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selected American Shares has no effect on the direction of Fidelity Select i.e., Fidelity Select and Selected American go up and down completely randomly.
Pair Corralation between Fidelity Select and Selected American
Assuming the 90 days horizon Fidelity Select Semiconductors is expected to generate 1.91 times more return on investment than Selected American. However, Fidelity Select is 1.91 times more volatile than Selected American Shares. It trades about 0.33 of its potential returns per unit of risk. Selected American Shares is currently generating about 0.24 per unit of risk. If you would invest 2,618 in Fidelity Select Semiconductors on April 25, 2025 and sell it today you would earn a total of 1,046 from holding Fidelity Select Semiconductors or generate 39.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Select Semiconductors vs. Selected American Shares
Performance |
| Timeline |
| Fidelity Select Semi |
| Selected American Shares |
Fidelity Select and Selected American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Select and Selected American
The main advantage of trading using opposite Fidelity Select and Selected American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Select position performs unexpectedly, Selected American 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 Selected American will offset losses from the drop in Selected American's long position.| Fidelity Select vs. Technology Portfolio Technology | Fidelity Select vs. Software And It | Fidelity Select vs. Computers Portfolio Puters | Fidelity Select vs. Health Care Portfolio |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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