Correlation Between Small-cap Value and Fidelity Large
Can any of the company-specific risk be diversified away by investing in both Small-cap Value and Fidelity Large 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 Small-cap Value and Fidelity Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Value Fund and Fidelity Large Cap, you can compare the effects of market volatilities on Small-cap Value and Fidelity Large 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 Small-cap Value with a short position of Fidelity Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small-cap Value and Fidelity Large.
Diversification Opportunities for Small-cap Value and Fidelity Large
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Small-cap and Fidelity is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Value Fund and Fidelity Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Large Cap and Small-cap Value 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 Small Cap Value Fund are associated (or correlated) with Fidelity Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Large Cap has no effect on the direction of Small-cap Value i.e., Small-cap Value and Fidelity Large go up and down completely randomly.
Pair Corralation between Small-cap Value and Fidelity Large
Assuming the 90 days horizon Small Cap Value Fund is expected to under-perform the Fidelity Large. In addition to that, Small-cap Value is 1.37 times more volatile than Fidelity Large Cap. It trades about -0.39 of its total potential returns per unit of risk. Fidelity Large Cap is currently generating about -0.15 per unit of volatility. If you would invest 1,612 in Fidelity Large Cap on October 12, 2024 and sell it today you would lose (40.00) from holding Fidelity Large Cap or give up 2.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Value Fund vs. Fidelity Large Cap
Performance |
| Timeline |
| Small Cap Value |
| Fidelity Large Cap |
Small-cap Value and Fidelity Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small-cap Value and Fidelity Large
The main advantage of trading using opposite Small-cap Value and Fidelity Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small-cap Value position performs unexpectedly, Fidelity Large 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 Large will offset losses from the drop in Fidelity Large's long position.| Small-cap Value vs. Principal Fds Money | Small-cap Value vs. Fidelity Government Money | Small-cap Value vs. Hewitt Money Market | Small-cap Value vs. Franklin Government Money |
| Fidelity Large vs. Victory Rs Partners | Fidelity Large vs. Lord Abbett Small | Fidelity Large vs. Great West Loomis Sayles | Fidelity Large vs. Small Cap Value Fund |
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 the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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