Correlation Between Fidelity Small and Royce Opportunity
Can any of the company-specific risk be diversified away by investing in both Fidelity Small and Royce Opportunity 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 Royce Opportunity 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 Royce Opportunity Fund, you can compare the effects of market volatilities on Fidelity Small and Royce Opportunity 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 Royce Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Small and Royce Opportunity.
Diversification Opportunities for Fidelity Small and Royce Opportunity
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Fidelity and Royce is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Small Cap and Royce Opportunity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royce Opportunity 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 Royce Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royce Opportunity has no effect on the direction of Fidelity Small i.e., Fidelity Small and Royce Opportunity go up and down completely randomly.
Pair Corralation between Fidelity Small and Royce Opportunity
Assuming the 90 days horizon Fidelity Small Cap is expected to generate 0.79 times more return on investment than Royce Opportunity. However, Fidelity Small Cap is 1.26 times less risky than Royce Opportunity. It trades about -0.05 of its potential returns per unit of risk. Royce Opportunity Fund is currently generating about -0.07 per unit of risk. If you would invest 2,516 in Fidelity Small Cap on January 15, 2025 and sell it today you would lose (342.00) from holding Fidelity Small Cap or give up 13.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Small Cap vs. Royce Opportunity Fund
Performance |
| Timeline |
| Fidelity Small Cap |
| Royce Opportunity |
Fidelity Small and Royce Opportunity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Small and Royce Opportunity
The main advantage of trading using opposite Fidelity Small and Royce Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Small position performs unexpectedly, Royce Opportunity 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 Royce Opportunity will offset losses from the drop in Royce Opportunity'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 |
| Royce Opportunity vs. Clearbridge Value Trust | Royce Opportunity vs. T Rowe Price | Royce Opportunity vs. Clearbridge International Growth | Royce Opportunity vs. Davis Financial 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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