Correlation Between Fidelity Puritan and Gold Portfolio

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

By analyzing existing cross correlation between Fidelity Puritan Fund and Gold Portfolio Fidelity, you can compare the effects of market volatilities on Fidelity Puritan and Gold Portfolio 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 Puritan with a short position of Gold Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Puritan and Gold Portfolio.

Diversification Opportunities for Fidelity Puritan and Gold Portfolio

0.75

Correlation Coefficient

Fidelity Puritan  Gold Portfolio

Poor diversification

The 3 months correlation between Fidelity and Gold is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Puritan Fund and Gold Portfolio Fidelity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Portfolio Fidelity and Fidelity Puritan 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 Puritan Fund are associated (or correlated) with Gold Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Portfolio Fidelity has no effect on the direction of Fidelity Puritan i.e., Fidelity Puritan and Gold Portfolio go up and down completely randomly.

Pair Corralation between Fidelity Puritan and Gold Portfolio

Assuming the 90 days horizon Fidelity Puritan is expected to generate 1.35 times less return on investment than Gold Portfolio. But when comparing it to its historical volatility, Fidelity Puritan Fund is 2.73 times less risky than Gold Portfolio. It trades about 0.12 of its potential returns per unit of risk. Gold Portfolio Fidelity is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,814  in Gold Portfolio Fidelity on July 6, 2024 and sell it today you would earn a total of  1,003  from holding Gold Portfolio Fidelity or generate 55.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Fidelity Puritan Fund  vs.  Gold Portfolio Fidelity

Fidelity Puritan

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Puritan Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, Fidelity Puritan is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gold Portfolio Fidelity

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Portfolio Fidelity are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Gold Portfolio may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Pair Trading with Fidelity Puritan and Gold Portfolio

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

The idea behind Fidelity Puritan Fund and Gold Portfolio Fidelity 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.