Correlation Between Fidelity Large and New Perspective
Can any of the company-specific risk be diversified away by investing in both Fidelity Large and New Perspective 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 Large and New Perspective into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Large Cap and New Perspective Fund, you can compare the effects of market volatilities on Fidelity Large and New Perspective 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 Large with a short position of New Perspective. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Large and New Perspective.
Diversification Opportunities for Fidelity Large and New Perspective
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fidelity and New is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Large Cap and New Perspective Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Perspective and Fidelity Large 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 Large Cap are associated (or correlated) with New Perspective. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Perspective has no effect on the direction of Fidelity Large i.e., Fidelity Large and New Perspective go up and down completely randomly.
Pair Corralation between Fidelity Large and New Perspective
Assuming the 90 days horizon Fidelity Large Cap is expected to generate 0.86 times more return on investment than New Perspective. However, Fidelity Large Cap is 1.16 times less risky than New Perspective. It trades about 0.16 of its potential returns per unit of risk. New Perspective Fund is currently generating about 0.09 per unit of risk. If you would invest 1,376 in Fidelity Large Cap on November 3, 2024 and sell it today you would earn a total of 234.00 from holding Fidelity Large Cap or generate 17.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Large Cap vs. New Perspective Fund
Performance |
| Timeline |
| Fidelity Large Cap |
| New Perspective |
Fidelity Large and New Perspective Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Large and New Perspective
The main advantage of trading using opposite Fidelity Large and New Perspective positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Large position performs unexpectedly, New Perspective 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 New Perspective will offset losses from the drop in New Perspective's long position.| Fidelity Large vs. Cmg Ultra Short | Fidelity Large vs. Oakhurst Short Duration | Fidelity Large vs. Blackrock Global Longshort | Fidelity Large vs. Transam Short Term Bond |
| New Perspective vs. Schwab Government Money | New Perspective vs. Prudential Financial Services | New Perspective vs. Blackstone Secured Lending | New Perspective vs. Chestnut Street Exchange |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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