Correlation Between Fidelity 500 and Fidelity Zero
Can any of the company-specific risk be diversified away by investing in both Fidelity 500 and Fidelity Zero 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 Fidelity Zero 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 Fidelity Zero Large, you can compare the effects of market volatilities on Fidelity 500 and Fidelity Zero 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 Fidelity Zero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity 500 and Fidelity Zero.
Diversification Opportunities for Fidelity 500 and Fidelity Zero
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 500 Index and Fidelity Zero Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Zero Large 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 Fidelity Zero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Zero Large has no effect on the direction of Fidelity 500 i.e., Fidelity 500 and Fidelity Zero go up and down completely randomly.
Pair Corralation between Fidelity 500 and Fidelity Zero
Assuming the 90 days horizon Fidelity 500 is expected to generate 1.06 times less return on investment than Fidelity Zero. But when comparing it to its historical volatility, Fidelity 500 Index is 1.01 times less risky than Fidelity Zero. It trades about 0.31 of its potential returns per unit of risk. Fidelity Zero Large is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 1,955 in Fidelity Zero Large on April 24, 2025 and sell it today you would earn a total of 307.00 from holding Fidelity Zero Large or generate 15.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.39% |
| Values | Daily Returns |
Fidelity 500 Index vs. Fidelity Zero Large
Performance |
| Timeline |
| Fidelity 500 Index |
| Fidelity Zero Large |
Fidelity 500 and Fidelity Zero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity 500 and Fidelity Zero
The main advantage of trading using opposite Fidelity 500 and Fidelity Zero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity 500 position performs unexpectedly, Fidelity Zero 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 Zero will offset losses from the drop in Fidelity Zero's long position.| Fidelity 500 vs. Fidelity Total Market | Fidelity 500 vs. Fidelity Extended Market | Fidelity 500 vs. Fidelity Zero Total | Fidelity 500 vs. Fidelity Small Cap |
| Fidelity Zero vs. Fidelity Zero Total | Fidelity Zero vs. Fidelity Zero International | Fidelity Zero vs. Fidelity Zero Extended | Fidelity Zero vs. Schwab Sp 500 |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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