Correlation Between Fidelity Contrafund and Cambiar Smid
Can any of the company-specific risk be diversified away by investing in both Fidelity Contrafund and Cambiar Smid 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 Contrafund and Cambiar Smid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Contrafund K6 and Cambiar Smid Fund, you can compare the effects of market volatilities on Fidelity Contrafund and Cambiar Smid 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 Contrafund with a short position of Cambiar Smid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Contrafund and Cambiar Smid.
Diversification Opportunities for Fidelity Contrafund and Cambiar Smid
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and Cambiar is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Contrafund K6 and Cambiar Smid Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambiar Smid and Fidelity Contrafund 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 Contrafund K6 are associated (or correlated) with Cambiar Smid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambiar Smid has no effect on the direction of Fidelity Contrafund i.e., Fidelity Contrafund and Cambiar Smid go up and down completely randomly.
Pair Corralation between Fidelity Contrafund and Cambiar Smid
Assuming the 90 days horizon Fidelity Contrafund K6 is expected to generate 1.25 times more return on investment than Cambiar Smid. However, Fidelity Contrafund is 1.25 times more volatile than Cambiar Smid Fund. It trades about 0.1 of its potential returns per unit of risk. Cambiar Smid Fund is currently generating about 0.09 per unit of risk. If you would invest 2,788 in Fidelity Contrafund K6 on September 1, 2024 and sell it today you would earn a total of 369.00 from holding Fidelity Contrafund K6 or generate 13.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Contrafund K6 vs. Cambiar Smid Fund
Performance |
| Timeline |
| Fidelity Contrafund |
| Cambiar Smid |
Fidelity Contrafund and Cambiar Smid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Contrafund and Cambiar Smid
The main advantage of trading using opposite Fidelity Contrafund and Cambiar Smid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Contrafund position performs unexpectedly, Cambiar Smid 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 Cambiar Smid will offset losses from the drop in Cambiar Smid's long position.The idea behind Fidelity Contrafund K6 and Cambiar Smid Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Cambiar Smid vs. Cambiar International Equity | Cambiar Smid vs. Cambiar Small Cap | Cambiar Smid vs. Cambiar Opportunity Fund | Cambiar Smid vs. Cambiar Small Cap |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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