Correlation Between Fidelity Diversified and Fidelity Contrafund
Can any of the company-specific risk be diversified away by investing in both Fidelity Diversified and Fidelity Contrafund 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 Diversified and Fidelity Contrafund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Diversified International and Fidelity Contrafund, you can compare the effects of market volatilities on Fidelity Diversified and Fidelity Contrafund 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 Diversified with a short position of Fidelity Contrafund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Diversified and Fidelity Contrafund.
Diversification Opportunities for Fidelity Diversified and Fidelity Contrafund
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Diversified Internati and Fidelity Contrafund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Contrafund and Fidelity Diversified 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 Diversified International are associated (or correlated) with Fidelity Contrafund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Contrafund has no effect on the direction of Fidelity Diversified i.e., Fidelity Diversified and Fidelity Contrafund go up and down completely randomly.
Pair Corralation between Fidelity Diversified and Fidelity Contrafund
Assuming the 90 days horizon Fidelity Diversified International is expected to generate 0.76 times more return on investment than Fidelity Contrafund. However, Fidelity Diversified International is 1.32 times less risky than Fidelity Contrafund. It trades about 0.29 of its potential returns per unit of risk. Fidelity Contrafund is currently generating about 0.16 per unit of risk. If you would invest 4,230 in Fidelity Diversified International on November 4, 2024 and sell it today you would earn a total of 201.00 from holding Fidelity Diversified International or generate 4.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Diversified Internati vs. Fidelity Contrafund
Performance |
| Timeline |
| Fidelity Diversified |
| Fidelity Contrafund |
Fidelity Diversified and Fidelity Contrafund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Diversified and Fidelity Contrafund
The main advantage of trading using opposite Fidelity Diversified and Fidelity Contrafund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Diversified position performs unexpectedly, Fidelity Contrafund 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 Contrafund will offset losses from the drop in Fidelity Contrafund's long position.| Fidelity Diversified vs. William Blair Small | Fidelity Diversified vs. Queens Road Small | Fidelity Diversified vs. Fpa Queens Road | Fidelity Diversified vs. Ab Small Cap |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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