Correlation Between Fidelity Contrafund and Alternative Credit
Can any of the company-specific risk be diversified away by investing in both Fidelity Contrafund and Alternative Credit 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 Alternative Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Contrafund and Alternative Credit Income, you can compare the effects of market volatilities on Fidelity Contrafund and Alternative Credit 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 Alternative Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Contrafund and Alternative Credit.
Diversification Opportunities for Fidelity Contrafund and Alternative Credit
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and Alternative is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Contrafund and Alternative Credit Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternative Credit 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 Alternative Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternative Credit Income has no effect on the direction of Fidelity Contrafund i.e., Fidelity Contrafund and Alternative Credit go up and down completely randomly.
Pair Corralation between Fidelity Contrafund and Alternative Credit
Assuming the 90 days horizon Fidelity Contrafund is expected to generate 3.49 times more return on investment than Alternative Credit. However, Fidelity Contrafund is 3.49 times more volatile than Alternative Credit Income. It trades about 0.13 of its potential returns per unit of risk. Alternative Credit Income is currently generating about 0.09 per unit of risk. If you would invest 1,431 in Fidelity Contrafund on August 31, 2024 and sell it today you would earn a total of 763.00 from holding Fidelity Contrafund or generate 53.32% 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. Alternative Credit Income
Performance |
| Timeline |
| Fidelity Contrafund |
| Alternative Credit Income |
Fidelity Contrafund and Alternative Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Contrafund and Alternative Credit
The main advantage of trading using opposite Fidelity Contrafund and Alternative Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Contrafund position performs unexpectedly, Alternative Credit 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 Alternative Credit will offset losses from the drop in Alternative Credit'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 |
| Alternative Credit vs. Davis Financial Fund | Alternative Credit vs. Gabelli Global Financial | Alternative Credit vs. Mesirow Financial Small | Alternative Credit vs. Transamerica Financial Life |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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