Correlation Between Fidelity Small and American Funds
Can any of the company-specific risk be diversified away by investing in both Fidelity Small and American Funds 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 American Funds 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 American Funds Emerging, you can compare the effects of market volatilities on Fidelity Small and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Small and American Funds.
Diversification Opportunities for Fidelity Small and American Funds
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fidelity and American is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Small Cap and American Funds Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Emerging 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Emerging has no effect on the direction of Fidelity Small i.e., Fidelity Small and American Funds go up and down completely randomly.
Pair Corralation between Fidelity Small and American Funds
Assuming the 90 days horizon Fidelity Small is expected to generate 13.36 times less return on investment than American Funds. In addition to that, Fidelity Small is 3.87 times more volatile than American Funds Emerging. It trades about 0.0 of its total potential returns per unit of risk. American Funds Emerging is currently generating about 0.09 per unit of volatility. If you would invest 773.00 in American Funds Emerging on September 13, 2024 and sell it today you would earn a total of 3.00 from holding American Funds Emerging or generate 0.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Small Cap vs. American Funds Emerging
Performance |
| Timeline |
| Fidelity Small Cap |
| American Funds Emerging |
Fidelity Small and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Small and American Funds
The main advantage of trading using opposite Fidelity Small and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Small position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' 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 |
| American Funds vs. Income Fund Of | American Funds vs. New World Fund | American Funds vs. American Mutual Fund | American Funds vs. American Mutual 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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