Correlation Between Fidelity Contrafund and Plumb Balanced
Can any of the company-specific risk be diversified away by investing in both Fidelity Contrafund and Plumb Balanced 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 Contrafund and Plumb Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Trafund Class and Plumb Balanced Fund, you can compare the effects of market volatilities on Fidelity Contrafund and Plumb Balanced 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 Contrafund with a short position of Plumb Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Contrafund and Plumb Balanced.
Diversification Opportunities for Fidelity Contrafund and Plumb Balanced
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Plumb is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Trafund Class and Plumb Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plumb Balanced and Fidelity Contrafund 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 Trafund Class are associated (or correlated) with Plumb Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plumb Balanced has no effect on the direction of Fidelity Contrafund i.e., Fidelity Contrafund and Plumb Balanced go up and down completely randomly.
Pair Corralation between Fidelity Contrafund and Plumb Balanced
Assuming the 90 days horizon Fidelity Trafund Class is expected to under-perform the Plumb Balanced. In addition to that, Fidelity Contrafund is 1.56 times more volatile than Plumb Balanced Fund. It trades about -0.13 of its total potential returns per unit of risk. Plumb Balanced Fund is currently generating about -0.12 per unit of volatility. If you would invest 3,737 in Plumb Balanced Fund on November 29, 2024 and sell it today you would lose (49.00) from holding Plumb Balanced Fund or give up 1.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Trafund Class vs. Plumb Balanced Fund
Performance |
| Timeline |
| Fidelity Trafund Class |
| Plumb Balanced |
Fidelity Contrafund and Plumb Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Contrafund and Plumb Balanced
The main advantage of trading using opposite Fidelity Contrafund and Plumb Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Contrafund position performs unexpectedly, Plumb Balanced 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 Plumb Balanced will offset losses from the drop in Plumb Balanced's long position.| Fidelity Contrafund vs. T Rowe Price | Fidelity Contrafund vs. Wilmington Funds | Fidelity Contrafund vs. Tiaa Cref Funds | Fidelity Contrafund vs. Hsbc Funds |
| Plumb Balanced vs. Plumb Equity Fund | Plumb Balanced vs. Value Line Asset | Plumb Balanced vs. Sit Balanced Fund | Plumb Balanced vs. Performance Trust Strategic |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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