Correlation Between Fidelity Contrafund and Fidelity Equity-income
Can any of the company-specific risk be diversified away by investing in both Fidelity Contrafund and Fidelity Equity-income 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 Equity-income 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 Equity Income Fund, you can compare the effects of market volatilities on Fidelity Contrafund and Fidelity Equity-income 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 Equity-income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Contrafund and Fidelity Equity-income.
Diversification Opportunities for Fidelity Contrafund and Fidelity Equity-income
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Contrafund and Fidelity Equity Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Equity Income 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 Equity-income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Equity Income has no effect on the direction of Fidelity Contrafund i.e., Fidelity Contrafund and Fidelity Equity-income go up and down completely randomly.
Pair Corralation between Fidelity Contrafund and Fidelity Equity-income
Assuming the 90 days horizon Fidelity Contrafund is expected to generate 1.54 times more return on investment than Fidelity Equity-income. However, Fidelity Contrafund is 1.54 times more volatile than Fidelity Equity Income Fund. It trades about 0.06 of its potential returns per unit of risk. Fidelity Equity Income Fund is currently generating about -0.16 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Contrafund vs. Fidelity Equity Income Fund
Performance |
| Timeline |
| Fidelity Contrafund |
| Fidelity Equity Income |
Fidelity Contrafund and Fidelity Equity-income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Contrafund and Fidelity Equity-income
The main advantage of trading using opposite Fidelity Contrafund and Fidelity Equity-income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Contrafund position performs unexpectedly, Fidelity Equity-income 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 Equity-income will offset losses from the drop in Fidelity Equity-income'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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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