Correlation Between Fidelity Small and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Fidelity Small and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Fidelity Small and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Small and Dow Jones.
Diversification Opportunities for Fidelity Small and Dow Jones
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Dow is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Small Cap and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Fidelity Small i.e., Fidelity Small and Dow Jones go up and down completely randomly.
Pair Corralation between Fidelity Small and Dow Jones
Assuming the 90 days horizon Fidelity Small Cap is expected to generate 1.54 times more return on investment than Dow Jones. However, Fidelity Small is 1.54 times more volatile than Dow Jones Industrial. It trades about 0.13 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.19 per unit of risk. If you would invest 1,207 in Fidelity Small Cap on August 31, 2024 and sell it today you would earn a total of 110.00 from holding Fidelity Small Cap or generate 9.11% 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. Dow Jones Industrial
Performance |
| Timeline |
Fidelity Small and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Fidelity Small Cap
Pair trading matchups for Fidelity Small
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Fidelity Small and Dow Jones
The main advantage of trading using opposite Fidelity Small and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Small position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Fidelity Small vs. Fidelity New Markets | Fidelity Small vs. Fidelity Advisor 529 | Fidelity Small vs. Fidelity New Markets | Fidelity Small vs. Fidelity Advisor 529 |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |