Correlation Between Aam Select and Fidelity Small
Can any of the company-specific risk be diversified away by investing in both Aam Select and Fidelity Small 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 Aam Select and Fidelity Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aam Select Income and Fidelity Small Cap, you can compare the effects of market volatilities on Aam Select and Fidelity Small 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 Aam Select with a short position of Fidelity Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aam Select and Fidelity Small.
Diversification Opportunities for Aam Select and Fidelity Small
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aam and Fidelity is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Aam Select Income and Fidelity Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Small Cap and Aam Select 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 Aam Select Income are associated (or correlated) with Fidelity Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Small Cap has no effect on the direction of Aam Select i.e., Aam Select and Fidelity Small go up and down completely randomly.
Pair Corralation between Aam Select and Fidelity Small
Assuming the 90 days horizon Aam Select is expected to generate 21.86 times less return on investment than Fidelity Small. But when comparing it to its historical volatility, Aam Select Income is 4.21 times less risky than Fidelity Small. It trades about 0.04 of its potential returns per unit of risk. Fidelity Small Cap is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,898 in Fidelity Small Cap on August 31, 2024 and sell it today you would earn a total of 141.00 from holding Fidelity Small Cap or generate 7.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aam Select Income vs. Fidelity Small Cap
Performance |
| Timeline |
| Aam Select Income |
| Fidelity Small Cap |
Aam Select and Fidelity Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aam Select and Fidelity Small
The main advantage of trading using opposite Aam Select and Fidelity Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aam Select position performs unexpectedly, Fidelity Small 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 Small will offset losses from the drop in Fidelity Small's long position.The idea behind Aam Select Income and Fidelity Small Cap 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 Small vs. Materials Portfolio Fidelity | Fidelity Small vs. Aam Select Income | Fidelity Small vs. Balanced Fund Investor | Fidelity Small vs. Scharf Global Opportunity |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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