Correlation Between Fidelity Small and Fidelity Growth
Can any of the company-specific risk be diversified away by investing in both Fidelity Small and Fidelity Growth 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 Growth 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 Growth Discovery, you can compare the effects of market volatilities on Fidelity Small and Fidelity Growth 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 Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Small and Fidelity Growth.
Diversification Opportunities for Fidelity Small and Fidelity Growth
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Small Cap and Fidelity Growth Discovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Growth Discovery 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 Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Growth Discovery has no effect on the direction of Fidelity Small i.e., Fidelity Small and Fidelity Growth go up and down completely randomly.
Pair Corralation between Fidelity Small and Fidelity Growth
Assuming the 90 days horizon Fidelity Small Cap is expected to generate 1.45 times more return on investment than Fidelity Growth. However, Fidelity Small is 1.45 times more volatile than Fidelity Growth Discovery. It trades about 0.22 of its potential returns per unit of risk. Fidelity Growth Discovery is currently generating about 0.04 per unit of risk. If you would invest 3,389 in Fidelity Small Cap on August 28, 2024 and sell it today you would earn a total of 223.00 from holding Fidelity Small Cap or generate 6.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Small Cap vs. Fidelity Growth Discovery
Performance |
| Timeline |
| Fidelity Small Cap |
| Fidelity Growth Discovery |
Fidelity Small and Fidelity Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Small and Fidelity Growth
The main advantage of trading using opposite Fidelity Small and Fidelity Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Small position performs unexpectedly, Fidelity Growth 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 Growth will offset losses from the drop in Fidelity Growth's long position.| Fidelity Small vs. Fidelity Small Cap | Fidelity Small vs. Fidelity Mid Cap | Fidelity Small vs. Fidelity Growth Discovery | Fidelity Small vs. Fidelity Focused Stock |
| Fidelity Growth vs. Fidelity Focused Stock | Fidelity Growth vs. Fidelity Trend Fund | Fidelity Growth vs. Fidelity Mega Cap | Fidelity Growth vs. Fidelity Value Discovery |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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