Correlation Between Fidelity Capital and Small Cap
Can any of the company-specific risk be diversified away by investing in both Fidelity Capital and Small Cap 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 Fidelity Capital and Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Capital Income and Small Cap Growth Profund, you can compare the effects of market volatilities on Fidelity Capital and Small Cap 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 Fidelity Capital with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Capital and Small Cap.
Diversification Opportunities for Fidelity Capital and Small Cap
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Fidelity and Small is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Capital Income and Small Cap Growth Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Growth and Fidelity Capital 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 Fidelity Capital Income are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Growth has no effect on the direction of Fidelity Capital i.e., Fidelity Capital and Small Cap go up and down completely randomly.
Pair Corralation between Fidelity Capital and Small Cap
Assuming the 90 days horizon Fidelity Capital is expected to generate 2.85 times less return on investment than Small Cap. But when comparing it to its historical volatility, Fidelity Capital Income is 2.03 times less risky than Small Cap. It trades about 0.13 of its potential returns per unit of risk. Small Cap Growth Profund is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 8,143 in Small Cap Growth Profund on November 3, 2024 and sell it today you would earn a total of 297.00 from holding Small Cap Growth Profund or generate 3.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Capital Income vs. Small Cap Growth Profund
Performance |
| Timeline |
| Fidelity Capital Income |
| Small Cap Growth |
Fidelity Capital and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Capital and Small Cap
The main advantage of trading using opposite Fidelity Capital and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Capital position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Fidelity Capital vs. Fidelity High Income | Fidelity Capital vs. Fidelity New Markets | Fidelity Capital vs. Fidelity Total Bond | Fidelity Capital vs. Fidelity Balanced Fund |
| Small Cap vs. Glg Intl Small | Small Cap vs. Smallcap Fund Fka | Small Cap vs. Franklin Small Cap | Small Cap vs. Ab Small Cap |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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