Correlation Between SP 500 and Fidelity Total

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both SP 500 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 SP 500 and Fidelity Total 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 Total Market, you can compare the effects of market volatilities on SP 500 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 SP 500 with a short position of Fidelity Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of SP 500 and Fidelity Total.

Diversification Opportunities for SP 500 and Fidelity Total

1.0
  Correlation Coefficient

No risk reduction

The 3 months correlation between SP 500 and Fidelity is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding SP 500 SPDR 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 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 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 SP 500 i.e., SP 500 and Fidelity Total go up and down completely randomly.

Pair Corralation between SP 500 and Fidelity Total

Considering the 90-day investment horizon SP 500 SPDR is expected to under-perform the Fidelity Total. But the etf apears to be less risky and, when comparing its historical volatility, SP 500 SPDR is 1.01 times less risky than Fidelity Total. The etf trades about -0.28 of its potential returns per unit of risk. The Fidelity Total Market is currently generating about -0.26 of returns per unit of risk over similar time horizon. If you would invest  1,374  in Fidelity Total Market on July 5, 2022 and sell it today you would lose (110.00)  from holding Fidelity Total Market or give up 8.01% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

SP 500 SPDR  vs.  Fidelity Total Market

 Performance (%) 
       Timeline  
SP 500 SPDR 
SP 500 Performance
0 of 100
Over the last 90 days SP 500 SPDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, SP 500 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SP 500 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

SP 500 and Fidelity Total Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SP 500 and Fidelity Total

The main advantage of trading using opposite SP 500 and Fidelity Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SP 500 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.
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 SP 500 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. SP 500'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, SP 500'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 SP 500 SPDR.
The idea behind SP 500 SPDR 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

Other Complementary Tools

Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Go
Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas
Go
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Go
Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Go
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Go
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Go
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Go
Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
Go
Content Syndication
Quickly integrate customizable finance content to your own investment portal
Go
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Go
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
Go