Correlation Between Semiconductor Bear and Fidelity Total

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Can any of the company-specific risk be diversified away by investing in both Semiconductor Bear and Fidelity Total 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 Semiconductor Bear and Fidelity Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Semiconductor Bear 3X and Fidelity Total Market, you can compare the effects of market volatilities on Semiconductor Bear and Fidelity Total 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 Semiconductor Bear with a short position of Fidelity Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semiconductor Bear and Fidelity Total.

Diversification Opportunities for Semiconductor Bear and Fidelity Total

-0.88
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Semiconductor and Fidelity is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Bear 3X and Fidelity Total Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Total Market and Semiconductor Bear 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 Semiconductor Bear 3X are associated (or correlated) with Fidelity Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Total Market has no effect on the direction of Semiconductor Bear i.e., Semiconductor Bear and Fidelity Total go up and down completely randomly.

Pair Corralation between Semiconductor Bear and Fidelity Total

Given the investment horizon of 90 days Semiconductor Bear 3X is expected to generate 5.3 times more return on investment than Fidelity Total. However, Semiconductor Bear is 5.3 times more volatile than Fidelity Total Market. It trades about 0.04 of its potential returns per unit of risk. Fidelity Total Market is currently generating about -0.05 per unit of risk. If you would invest  6,450  in Semiconductor Bear 3X on July 2, 2022 and sell it today you would earn a total of  623.00  from holding Semiconductor Bear 3X or generate 9.66% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Semiconductor Bear 3X  vs.  Fidelity Total Market

 Performance (%) 
       Timeline  
Semiconductor Bear 
Semiconductor Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Semiconductor Bear 3X are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Semiconductor Bear reported solid returns over the last few months and may actually be approaching a breakup point.

Semiconductor Price Channel

Fidelity Total Market 
Fidelity Performance
0 of 100
Over the last 90 days Fidelity Total Market has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Fidelity Total is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Price Channel

Semiconductor Bear and Fidelity Total Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Semiconductor Bear and Fidelity Total

The main advantage of trading using opposite Semiconductor Bear and Fidelity Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semiconductor Bear position performs unexpectedly, Fidelity Total 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 Total will offset losses from the drop in Fidelity Total's long position.
Semiconductor Bear vs. Walt Disney
The idea behind Semiconductor Bear 3X and Fidelity Total Market 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 Total vs. Walt Disney
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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