Correlation Between SP 500 and Fidelity Info

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Can any of the company-specific risk be diversified away by investing in both SP 500 and Fidelity Info 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 SP 500 and Fidelity Info into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SP 500 SPDR and Fidelity Info Tech, you can compare the effects of market volatilities on SP 500 and Fidelity Info 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 SP 500 with a short position of Fidelity Info. Check out your portfolio center. Please also check ongoing floating volatility patterns of SP 500 and Fidelity Info.

Diversification Opportunities for SP 500 and Fidelity Info

0.97
  Correlation Coefficient

Almost no diversification

The 3 months correlation between SP 500 and Fidelity is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding SP 500 SPDR and Fidelity Info Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Info Tech and SP 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 SP 500 SPDR are associated (or correlated) with Fidelity Info. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Info Tech has no effect on the direction of SP 500 i.e., SP 500 and Fidelity Info go up and down completely randomly.

Pair Corralation between SP 500 and Fidelity Info

Considering the 90-day investment horizon SP 500 SPDR is expected to generate 0.69 times more return on investment than Fidelity Info. However, SP 500 SPDR is 1.44 times less risky than Fidelity Info. It trades about 0.05 of its potential returns per unit of risk. Fidelity Info Tech is currently generating about 0.03 per unit of risk. If you would invest  33,767  in SP 500 SPDR on May 18, 2022 and sell it today you would earn a total of  9,203  from holding SP 500 SPDR or generate 27.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

SP 500 SPDR  vs.  Fidelity Info Tech

 Performance (%) 
       Timeline  
SP 500 SPDR 
SP 500 Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in SP 500 SPDR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, SP 500 may actually be approaching a critical reversion point that can send shares even higher in September 2022.

SP 500 Price Channel

Fidelity Info Tech 
Fidelity Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Info Tech are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Fidelity Info sustained solid returns over the last few months and may actually be approaching a breakup point.

Fidelity Price Channel

SP 500 and Fidelity Info Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SP 500 and Fidelity Info

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

SP 500 SPDR

Pair trading matchups for SP 500

The idea behind SP 500 SPDR and Fidelity Info Tech 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 Info Tech

Pair trading matchups for Fidelity Info

Zimmer Biomet vs. Fidelity Info
Bristol-Myers Squibb vs. Fidelity Info
Sentinelone Inc vs. Fidelity Info
Dupont Denemours vs. Fidelity Info
B of A vs. Fidelity Info
Invesco Solar vs. Fidelity Info
Goldman Sachs vs. Fidelity Info
T Rowe vs. Fidelity Info
ConocoPhillips vs. Fidelity Info
Otp Bank vs. Fidelity Info
Johnson Johnson vs. Fidelity Info
Lam Research vs. Fidelity Info
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Fidelity Info as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Fidelity Info's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Fidelity Info's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Fidelity Info Tech.
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 Shere Portfolio module to track or share privately all of your investments from the convenience of any device.

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