Correlation Between Fidelity Series and Large Cap
Can any of the company-specific risk be diversified away by investing in both Fidelity Series and Large Cap 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 Series and Large Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Series Government and Large Cap E, you can compare the effects of market volatilities on Fidelity Series and Large Cap 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 Series with a short position of Large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Series and Large Cap.
Diversification Opportunities for Fidelity Series and Large Cap
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fidelity and Large is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Series Government and Large Cap E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap E and Fidelity Series 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 Series Government are associated (or correlated) with Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap E has no effect on the direction of Fidelity Series i.e., Fidelity Series and Large Cap go up and down completely randomly.
Pair Corralation between Fidelity Series and Large Cap
Assuming the 90 days horizon Fidelity Series is expected to generate 47.75 times less return on investment than Large Cap. But when comparing it to its historical volatility, Fidelity Series Government is 2.49 times less risky than Large Cap. It trades about 0.02 of its potential returns per unit of risk. Large Cap E is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 2,485 in Large Cap E on September 1, 2024 and sell it today you would earn a total of 149.00 from holding Large Cap E or generate 6.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Series Government vs. Large Cap E
Performance |
| Timeline |
| Fidelity Series Gove |
| Large Cap E |
Fidelity Series and Large Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Series and Large Cap
The main advantage of trading using opposite Fidelity Series and Large Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Series position performs unexpectedly, Large Cap 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 Large Cap will offset losses from the drop in Large Cap's long position.| Fidelity Series vs. Fidelity Freedom 2015 | Fidelity Series vs. Fidelity Puritan Fund | Fidelity Series vs. Fidelity Puritan Fund | Fidelity Series vs. Fidelity Pennsylvania Municipal |
| Large Cap vs. Mesirow Financial Small | Large Cap vs. Vanguard Financials Index | Large Cap vs. Angel Oak Financial | Large Cap vs. Davis Financial Fund |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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