Correlation Between Fidelity Small and Fidelity Blue
Can any of the company-specific risk be diversified away by investing in both Fidelity Small and Fidelity Blue 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 Fidelity Blue 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 Fidelity Blue Chip, you can compare the effects of market volatilities on Fidelity Small and Fidelity Blue 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 Fidelity Blue. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Small and Fidelity Blue.
Diversification Opportunities for Fidelity Small and Fidelity Blue
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Small Cap and Fidelity Blue Chip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Blue Chip 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 Fidelity Blue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Blue Chip has no effect on the direction of Fidelity Small i.e., Fidelity Small and Fidelity Blue go up and down completely randomly.
Pair Corralation between Fidelity Small and Fidelity Blue
Assuming the 90 days horizon Fidelity Small is expected to generate 2.3 times less return on investment than Fidelity Blue. In addition to that, Fidelity Small is 1.08 times more volatile than Fidelity Blue Chip. It trades about 0.05 of its total potential returns per unit of risk. Fidelity Blue Chip is currently generating about 0.12 per unit of volatility. If you would invest 1,856 in Fidelity Blue Chip on September 3, 2024 and sell it today you would earn a total of 1,804 from holding Fidelity Blue Chip or generate 97.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Small Cap vs. Fidelity Blue Chip
Performance |
| Timeline |
| Fidelity Small Cap |
| Fidelity Blue Chip |
Fidelity Small and Fidelity Blue Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Small and Fidelity Blue
The main advantage of trading using opposite Fidelity Small and Fidelity Blue positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Small position performs unexpectedly, Fidelity Blue 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 Blue will offset losses from the drop in Fidelity Blue's long position.| Fidelity Small vs. Fidelity Large Cap | Fidelity Small vs. Fidelity Small Cap | Fidelity Small vs. Fidelity Mid Cap | Fidelity Small vs. Fidelity Mid Cap |
| Fidelity Blue vs. Ab Global Risk | Fidelity Blue vs. Nuveen High Income | Fidelity Blue vs. Ab High Income | Fidelity Blue vs. Pace High Yield |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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