Correlation Between Fidelity Low-priced and American Beacon
Can any of the company-specific risk be diversified away by investing in both Fidelity Low-priced and American Beacon 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 Low-priced and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Low Priced Stock and American Beacon Small, you can compare the effects of market volatilities on Fidelity Low-priced and American Beacon 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 Low-priced with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Low-priced and American Beacon.
Diversification Opportunities for Fidelity Low-priced and American Beacon
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FIDELITY and American is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Low Priced Stock and American Beacon Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Small and Fidelity Low-priced 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 Low Priced Stock are associated (or correlated) with American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Small has no effect on the direction of Fidelity Low-priced i.e., Fidelity Low-priced and American Beacon go up and down completely randomly.
Pair Corralation between Fidelity Low-priced and American Beacon
Assuming the 90 days horizon Fidelity Low-priced is expected to generate 2.0 times less return on investment than American Beacon. But when comparing it to its historical volatility, Fidelity Low Priced Stock is 1.78 times less risky than American Beacon. It trades about 0.19 of its potential returns per unit of risk. American Beacon Small is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,711 in American Beacon Small on August 31, 2024 and sell it today you would earn a total of 211.00 from holding American Beacon Small or generate 7.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Low Priced Stock vs. American Beacon Small
Performance |
| Timeline |
| Fidelity Low Priced |
| American Beacon Small |
Fidelity Low-priced and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Low-priced and American Beacon
The main advantage of trading using opposite Fidelity Low-priced and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Low-priced position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| Fidelity Low-priced vs. Mutual Of America | Fidelity Low-priced vs. Hennessy Nerstone Mid | Fidelity Low-priced vs. Mid Cap Value Profund | Fidelity Low-priced vs. Ab Discovery Value |
| American Beacon vs. American Beacon International | American Beacon vs. American Beacon Large | American Beacon vs. Fidelity Low Priced Stock | American Beacon vs. Europacific Growth 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |