Correlation Between Fidelity 500 and Schwab Sp

Can any of the company-specific risk be diversified away by investing in both Fidelity 500 and Schwab Sp 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 Schwab Sp 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 Schwab Sp 500, you can compare the effects of market volatilities on Fidelity 500 and Schwab Sp 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 Schwab Sp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity 500 and Schwab Sp.

Diversification Opportunities for Fidelity 500 and Schwab Sp

1.0

Correlation Coefficient

Fidelity 500  Schwab Sp

No risk reduction

The 3 months correlation between Fidelity and Schwab is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity 500 Index and Schwab Sp 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Sp 500 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 Schwab Sp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Sp 500 has no effect on the direction of Fidelity 500 i.e., Fidelity 500 and Schwab Sp go up and down completely randomly.

Pair Corralation between Fidelity 500 and Schwab Sp

Assuming the 90 days horizon Fidelity 500 Index is expected to generate 1.0 times more return on investment than Schwab Sp. However, Fidelity 500 Index is 1.0 times less risky than Schwab Sp. It trades about 0.22 of its potential returns per unit of risk. Schwab Sp 500 is currently generating about 0.22 per unit of risk. If you would invest  19,573  in Fidelity 500 Index on May 5, 2025 and sell it today you would earn a total of  2,105  from holding Fidelity 500 Index or generate 10.75% return on investment over 90 days.

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

Fidelity 500 Index  vs.  Schwab Sp 500

Fidelity 500 Index

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity 500 Index are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Fidelity 500 may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Schwab Sp 500

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Schwab Sp 500 are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Schwab Sp may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Fidelity 500 and Schwab Sp

The main advantage of trading using opposite Fidelity 500 and Schwab Sp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity 500 position performs unexpectedly, Schwab Sp 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 Schwab Sp will offset losses from the drop in Schwab Sp's long position.

The idea behind Fidelity 500 Index and Schwab Sp 500 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.