Correlation Between Fidelity Contrafund and Fidelity Diversified
Can any of the company-specific risk be diversified away by investing in both Fidelity Contrafund and Fidelity Diversified 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 Fidelity Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Contrafund and Fidelity Diversified International, you can compare the effects of market volatilities on Fidelity Contrafund and Fidelity Diversified 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 Fidelity Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Contrafund and Fidelity Diversified.
Diversification Opportunities for Fidelity Contrafund and Fidelity Diversified
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fidelity and Fidelity is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Contrafund and Fidelity Diversified Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Diversified 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 Contrafund are associated (or correlated) with Fidelity Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Diversified has no effect on the direction of Fidelity Contrafund i.e., Fidelity Contrafund and Fidelity Diversified go up and down completely randomly.
Pair Corralation between Fidelity Contrafund and Fidelity Diversified
Assuming the 90 days horizon Fidelity Contrafund is expected to generate 1.32 times more return on investment than Fidelity Diversified. However, Fidelity Contrafund is 1.32 times more volatile than Fidelity Diversified International. It trades about 0.06 of its potential returns per unit of risk. Fidelity Diversified International is currently generating about 0.03 per unit of risk. If you would invest 2,183 in Fidelity Contrafund on October 26, 2024 and sell it today you would earn a total of 49.00 from holding Fidelity Contrafund or generate 2.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Contrafund vs. Fidelity Diversified Internati
Performance |
| Timeline |
| Fidelity Contrafund |
| Fidelity Diversified |
Fidelity Contrafund and Fidelity Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Contrafund and Fidelity Diversified
The main advantage of trading using opposite Fidelity Contrafund and Fidelity Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Contrafund position performs unexpectedly, Fidelity Diversified 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 Diversified will offset losses from the drop in Fidelity Diversified's long position.| Fidelity Contrafund vs. Fidelity Low Priced Stock | Fidelity Contrafund vs. Fidelity Growth Pany | Fidelity Contrafund vs. Fidelity Magellan Fund | Fidelity Contrafund vs. Fidelity Diversified International |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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