Correlation Between Fidelity Contrafund and Growth Fund
Can any of the company-specific risk be diversified away by investing in both Fidelity Contrafund and Growth Fund 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 Growth Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Contrafund and Growth Fund Investor, you can compare the effects of market volatilities on Fidelity Contrafund and Growth Fund 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 Growth Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Contrafund and Growth Fund.
Diversification Opportunities for Fidelity Contrafund and Growth Fund
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Growth is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Contrafund and Growth Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund Investor 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 Growth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund Investor has no effect on the direction of Fidelity Contrafund i.e., Fidelity Contrafund and Growth Fund go up and down completely randomly.
Pair Corralation between Fidelity Contrafund and Growth Fund
Assuming the 90 days horizon Fidelity Contrafund is expected to generate 0.91 times more return on investment than Growth Fund. However, Fidelity Contrafund is 1.1 times less risky than Growth Fund. It trades about 0.12 of its potential returns per unit of risk. Growth Fund Investor is currently generating about 0.1 per unit of risk. If you would invest 1,499 in Fidelity Contrafund on September 12, 2024 and sell it today you would earn a total of 671.00 from holding Fidelity Contrafund or generate 44.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Contrafund vs. Growth Fund Investor
Performance |
| Timeline |
| Fidelity Contrafund |
| Growth Fund Investor |
Fidelity Contrafund and Growth Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Contrafund and Growth Fund
The main advantage of trading using opposite Fidelity Contrafund and Growth Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Contrafund position performs unexpectedly, Growth Fund 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 Growth Fund will offset losses from the drop in Growth Fund's long position.| Fidelity Contrafund vs. Growth Fund Investor | Fidelity Contrafund vs. Select Fund Investor | Fidelity Contrafund vs. International Growth Fund | Fidelity Contrafund vs. Heritage Fund Investor |
| Growth Fund vs. Select Fund Investor | Growth Fund vs. International Growth Fund | Growth Fund vs. Heritage Fund Investor | Growth Fund vs. Janus Global Research |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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