Correlation Between Fidelity Series and Small Capitalization
Can any of the company-specific risk be diversified away by investing in both Fidelity Series and Small Capitalization 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 Small Capitalization into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Series 1000 and Small Capitalization Portfolio, you can compare the effects of market volatilities on Fidelity Series and Small Capitalization 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 Small Capitalization. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Series and Small Capitalization.
Diversification Opportunities for Fidelity Series and Small Capitalization
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Small is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Series 1000 and Small Capitalization Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Capitalization 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 1000 are associated (or correlated) with Small Capitalization. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Capitalization has no effect on the direction of Fidelity Series i.e., Fidelity Series and Small Capitalization go up and down completely randomly.
Pair Corralation between Fidelity Series and Small Capitalization
Assuming the 90 days horizon Fidelity Series 1000 is expected to generate 0.49 times more return on investment than Small Capitalization. However, Fidelity Series 1000 is 2.05 times less risky than Small Capitalization. It trades about 0.11 of its potential returns per unit of risk. Small Capitalization Portfolio is currently generating about 0.04 per unit of risk. If you would invest 1,376 in Fidelity Series 1000 on September 12, 2024 and sell it today you would earn a total of 374.00 from holding Fidelity Series 1000 or generate 27.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Series 1000 vs. Small Capitalization Portfolio
Performance |
| Timeline |
| Fidelity Series 1000 |
| Small Capitalization |
Fidelity Series and Small Capitalization Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Series and Small Capitalization
The main advantage of trading using opposite Fidelity Series and Small Capitalization positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Series position performs unexpectedly, Small Capitalization 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 Small Capitalization will offset losses from the drop in Small Capitalization's long position.| Fidelity Series vs. Vanguard Value Index | Fidelity Series vs. Dodge Cox Stock | Fidelity Series vs. American Mutual Fund | Fidelity Series vs. American Funds American |
| Small Capitalization vs. Fidelity Series 1000 | Small Capitalization vs. Virtus Nfj Large Cap | Small Capitalization vs. Aqr Large Cap | Small Capitalization vs. Qs Large 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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