Correlation Between Fidelity Small and Baron Small
Can any of the company-specific risk be diversified away by investing in both Fidelity Small and Baron Small 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 Baron Small 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 Baron Small Cap, you can compare the effects of market volatilities on Fidelity Small and Baron Small 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 Baron Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Small and Baron Small.
Diversification Opportunities for Fidelity Small and Baron Small
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Baron is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Small Cap and Baron Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Small 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 Baron Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Small Cap has no effect on the direction of Fidelity Small i.e., Fidelity Small and Baron Small go up and down completely randomly.
Pair Corralation between Fidelity Small and Baron Small
Assuming the 90 days horizon Fidelity Small Cap is expected to generate 1.09 times more return on investment than Baron Small. However, Fidelity Small is 1.09 times more volatile than Baron Small Cap. It trades about 0.1 of its potential returns per unit of risk. Baron Small Cap is currently generating about 0.1 per unit of risk. If you would invest 3,152 in Fidelity Small Cap on August 29, 2024 and sell it today you would earn a total of 529.00 from holding Fidelity Small Cap or generate 16.78% 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. Baron Small Cap
Performance |
| Timeline |
| Fidelity Small Cap |
| Baron Small Cap |
Fidelity Small and Baron Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Small and Baron Small
The main advantage of trading using opposite Fidelity Small and Baron Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Small position performs unexpectedly, Baron Small 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 Baron Small will offset losses from the drop in Baron Small's long position.| Fidelity Small vs. Fidelity Small Cap | Fidelity Small vs. Fidelity Small Cap | Fidelity Small vs. Fidelity Small Cap | Fidelity Small vs. Fidelity Small Cap |
| Baron Small vs. T Rowe Price | Baron Small vs. T Rowe Price | Baron Small vs. Fidelity Small Cap | Baron Small vs. Virtus Kar Small Cap |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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