Correlation Between Fidelity Contrafund and Utilities Portfolio
Can any of the company-specific risk be diversified away by investing in both Fidelity Contrafund and Utilities Portfolio 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 Utilities Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Contrafund and Utilities Portfolio Utilities, you can compare the effects of market volatilities on Fidelity Contrafund and Utilities Portfolio 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 Utilities Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Contrafund and Utilities Portfolio.
Diversification Opportunities for Fidelity Contrafund and Utilities Portfolio
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and Utilities is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Contrafund and Utilities Portfolio Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utilities Portfolio 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 Utilities Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utilities Portfolio has no effect on the direction of Fidelity Contrafund i.e., Fidelity Contrafund and Utilities Portfolio go up and down completely randomly.
Pair Corralation between Fidelity Contrafund and Utilities Portfolio
Assuming the 90 days horizon Fidelity Contrafund is expected to generate 2.14 times less return on investment than Utilities Portfolio. But when comparing it to its historical volatility, Fidelity Contrafund is 1.19 times less risky than Utilities Portfolio. It trades about 0.07 of its potential returns per unit of risk. Utilities Portfolio Utilities is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 12,751 in Utilities Portfolio Utilities on August 28, 2024 and sell it today you would earn a total of 421.00 from holding Utilities Portfolio Utilities or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Contrafund vs. Utilities Portfolio Utilities
Performance |
| Timeline |
| Fidelity Contrafund |
| Utilities Portfolio |
Fidelity Contrafund and Utilities Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Contrafund and Utilities Portfolio
The main advantage of trading using opposite Fidelity Contrafund and Utilities Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Contrafund position performs unexpectedly, Utilities Portfolio 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 Utilities Portfolio will offset losses from the drop in Utilities Portfolio'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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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