Correlation Between Fidelity Contrafund and Nicholas
Can any of the company-specific risk be diversified away by investing in both Fidelity Contrafund and Nicholas 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 Nicholas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Contrafund and Nicholas Ltd Edition, you can compare the effects of market volatilities on Fidelity Contrafund and Nicholas 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 Nicholas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Contrafund and Nicholas.
Diversification Opportunities for Fidelity Contrafund and Nicholas
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and Nicholas is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Contrafund and Nicholas Ltd Edition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicholas Edition 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 Nicholas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nicholas Edition has no effect on the direction of Fidelity Contrafund i.e., Fidelity Contrafund and Nicholas go up and down completely randomly.
Pair Corralation between Fidelity Contrafund and Nicholas
Assuming the 90 days horizon Fidelity Contrafund is expected to generate 4.3 times less return on investment than Nicholas. But when comparing it to its historical volatility, Fidelity Contrafund is 1.32 times less risky than Nicholas. It trades about 0.07 of its potential returns per unit of risk. Nicholas Ltd Edition is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 3,076 in Nicholas Ltd Edition on August 29, 2024 and sell it today you would earn a total of 231.00 from holding Nicholas Ltd Edition or generate 7.51% 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. Nicholas Ltd Edition
Performance |
| Timeline |
| Fidelity Contrafund |
| Nicholas Edition |
Fidelity Contrafund and Nicholas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Contrafund and Nicholas
The main advantage of trading using opposite Fidelity Contrafund and Nicholas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Contrafund position performs unexpectedly, Nicholas 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 Nicholas will offset losses from the drop in Nicholas' 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 |
| Nicholas vs. Putnam Equity Income | Nicholas vs. Putnam Growth Opportunities | Nicholas vs. HUMANA INC | Nicholas vs. Aquagold 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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