Correlation Between Fidelity Small and Large Company
Can any of the company-specific risk be diversified away by investing in both Fidelity Small and Large Company 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 Large Company 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 Large Pany Value, you can compare the effects of market volatilities on Fidelity Small and Large Company 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 Large Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Small and Large Company.
Diversification Opportunities for Fidelity Small and Large Company
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Large is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Small Cap and Large Pany Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Pany Value 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 Large Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Pany Value has no effect on the direction of Fidelity Small i.e., Fidelity Small and Large Company go up and down completely randomly.
Pair Corralation between Fidelity Small and Large Company
Assuming the 90 days horizon Fidelity Small Cap is expected to generate 1.5 times more return on investment than Large Company. However, Fidelity Small is 1.5 times more volatile than Large Pany Value. It trades about 0.05 of its potential returns per unit of risk. Large Pany Value is currently generating about 0.05 per unit of risk. If you would invest 2,151 in Fidelity Small Cap on August 29, 2024 and sell it today you would earn a total of 662.00 from holding Fidelity Small Cap or generate 30.78% 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. Large Pany Value
Performance |
| Timeline |
| Fidelity Small Cap |
| Large Pany Value |
Fidelity Small and Large Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Small and Large Company
The main advantage of trading using opposite Fidelity Small and Large Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Small position performs unexpectedly, Large Company 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 Large Company will offset losses from the drop in Large Company'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 |
| Large Company vs. Dodge Cox Stock | Large Company vs. American Mutual Fund | Large Company vs. American Funds American | Large Company vs. American Funds American |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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