Correlation Between Fidelity Small and Money Market
Can any of the company-specific risk be diversified away by investing in both Fidelity Small and Money Market 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 Money Market 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 Money Market Obligations, you can compare the effects of market volatilities on Fidelity Small and Money Market 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 Money Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Small and Money Market.
Diversification Opportunities for Fidelity Small and Money Market
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fidelity and Money is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Small Cap and Money Market Obligations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Money Market Obligations 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 Money Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Money Market Obligations has no effect on the direction of Fidelity Small i.e., Fidelity Small and Money Market go up and down completely randomly.
Pair Corralation between Fidelity Small and Money Market
Assuming the 90 days horizon Fidelity Small Cap is expected to generate 10.03 times more return on investment than Money Market. However, Fidelity Small is 10.03 times more volatile than Money Market Obligations. It trades about 0.07 of its potential returns per unit of risk. Money Market Obligations is currently generating about 0.13 per unit of risk. If you would invest 2,055 in Fidelity Small Cap on October 24, 2024 and sell it today you would earn a total of 99.00 from holding Fidelity Small Cap or generate 4.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Small Cap vs. Money Market Obligations
Performance |
| Timeline |
| Fidelity Small Cap |
| Money Market Obligations |
Fidelity Small and Money Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Small and Money Market
The main advantage of trading using opposite Fidelity Small and Money Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Small position performs unexpectedly, Money Market 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 Money Market will offset losses from the drop in Money Market's long position.| Fidelity Small vs. Fidelity Small Cap | Fidelity Small vs. Fidelity Small Cap | Fidelity Small vs. Fidelity Mid Cap | Fidelity Small vs. Fidelity Advisor Value |
| Money Market vs. Vanguard Total Stock | Money Market vs. Vanguard 500 Index | Money Market vs. Vanguard Total Stock | Money Market vs. Vanguard Total Stock |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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