Correlation Between Fidelity Contrafund and Sit Dividend
Can any of the company-specific risk be diversified away by investing in both Fidelity Contrafund and Sit Dividend 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 Sit Dividend 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 Sit Dividend Growth, you can compare the effects of market volatilities on Fidelity Contrafund and Sit Dividend 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 Sit Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Contrafund and Sit Dividend.
Diversification Opportunities for Fidelity Contrafund and Sit Dividend
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Sit is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Contrafund K6 and Sit Dividend Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Dividend Growth 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 Sit Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Dividend Growth has no effect on the direction of Fidelity Contrafund i.e., Fidelity Contrafund and Sit Dividend go up and down completely randomly.
Pair Corralation between Fidelity Contrafund and Sit Dividend
Assuming the 90 days horizon Fidelity Contrafund K6 is expected to generate 1.44 times more return on investment than Sit Dividend. However, Fidelity Contrafund is 1.44 times more volatile than Sit Dividend Growth. It trades about 0.1 of its potential returns per unit of risk. Sit Dividend Growth is currently generating about 0.13 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 | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Contrafund K6 vs. Sit Dividend Growth
Performance |
| Timeline |
| Fidelity Contrafund |
| Sit Dividend Growth |
Fidelity Contrafund and Sit Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Contrafund and Sit Dividend
The main advantage of trading using opposite Fidelity Contrafund and Sit Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Contrafund position performs unexpectedly, Sit Dividend 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 Sit Dividend will offset losses from the drop in Sit Dividend's long position.The idea behind Fidelity Contrafund K6 and Sit Dividend Growth 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.
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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