Correlation Between Fidelity Small and Fidelity Large
Can any of the company-specific risk be diversified away by investing in both Fidelity Small and Fidelity Large 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 Small and Fidelity Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Small Cap and Fidelity Large Cap, you can compare the effects of market volatilities on Fidelity Small and Fidelity Large 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 Small with a short position of Fidelity Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Small and Fidelity Large.
Diversification Opportunities for Fidelity Small and Fidelity Large
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and FIDELITY is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Small Cap and Fidelity Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Large Cap and Fidelity Small 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 Small Cap are associated (or correlated) with Fidelity Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Large Cap has no effect on the direction of Fidelity Small i.e., Fidelity Small and Fidelity Large go up and down completely randomly.
Pair Corralation between Fidelity Small and Fidelity Large
Assuming the 90 days horizon Fidelity Small is expected to generate 1.75 times less return on investment than Fidelity Large. In addition to that, Fidelity Small is 1.2 times more volatile than Fidelity Large Cap. It trades about 0.06 of its total potential returns per unit of risk. Fidelity Large Cap is currently generating about 0.12 per unit of volatility. If you would invest 2,432 in Fidelity Large Cap on September 3, 2024 and sell it today you would earn a total of 511.00 from holding Fidelity Large Cap or generate 21.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Small Cap vs. Fidelity Large Cap
Performance |
| Timeline |
| Fidelity Small Cap |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Fidelity Large Cap |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Fidelity Small and Fidelity Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Small and Fidelity Large
The main advantage of trading using opposite Fidelity Small and Fidelity Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Small position performs unexpectedly, Fidelity Large 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 Large will offset losses from the drop in Fidelity Large's long position.The idea behind Fidelity Small Cap and Fidelity Large Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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