Correlation Between Fidelity Small and Emerald Growth
Can any of the company-specific risk be diversified away by investing in both Fidelity Small and Emerald 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 Emerald 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 Emerald Growth Fund, you can compare the effects of market volatilities on Fidelity Small and Emerald 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 Emerald Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Small and Emerald Growth.
Diversification Opportunities for Fidelity Small and Emerald Growth
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Emerald is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Small Cap and Emerald Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerald Growth 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 Emerald Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerald Growth has no effect on the direction of Fidelity Small i.e., Fidelity Small and Emerald Growth go up and down completely randomly.
Pair Corralation between Fidelity Small and Emerald Growth
Assuming the 90 days horizon Fidelity Small Cap is expected to generate 0.86 times more return on investment than Emerald Growth. However, Fidelity Small Cap is 1.16 times less risky than Emerald Growth. It trades about 0.14 of its potential returns per unit of risk. Emerald Growth Fund is currently generating about 0.09 per unit of risk. If you would invest 2,388 in Fidelity Small Cap on September 1, 2024 and sell it today you would earn a total of 1,307 from holding Fidelity Small Cap or generate 54.73% 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. Emerald Growth Fund
Performance |
| Timeline |
| Fidelity Small Cap |
| Emerald Growth |
Fidelity Small and Emerald Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Small and Emerald Growth
The main advantage of trading using opposite Fidelity Small and Emerald Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Small position performs unexpectedly, Emerald 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 Emerald Growth will offset losses from the drop in Emerald Growth'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 |
| Emerald Growth vs. Emerald Growth Fund | Emerald Growth vs. Emerald Growth Fund | Emerald Growth vs. Driehaus Micro Cap | Emerald Growth vs. Eventide Gilead 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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