Correlation Between Aggressive Growth and Fidelity Low
Can any of the company-specific risk be diversified away by investing in both Aggressive Growth and Fidelity Low 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 Aggressive Growth and Fidelity Low into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aggressive Growth Allocation and Fidelity Low Volatility, you can compare the effects of market volatilities on Aggressive Growth and Fidelity Low 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 Aggressive Growth with a short position of Fidelity Low. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aggressive Growth and Fidelity Low.
Diversification Opportunities for Aggressive Growth and Fidelity Low
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aggressive and Fidelity is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Aggressive Growth Allocation and Fidelity Low Volatility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Low Volatility and Aggressive Growth 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 Aggressive Growth Allocation are associated (or correlated) with Fidelity Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Low Volatility has no effect on the direction of Aggressive Growth i.e., Aggressive Growth and Fidelity Low go up and down completely randomly.
Pair Corralation between Aggressive Growth and Fidelity Low
Assuming the 90 days horizon Aggressive Growth is expected to generate 2.48 times less return on investment than Fidelity Low. But when comparing it to its historical volatility, Aggressive Growth Allocation is 1.1 times less risky than Fidelity Low. It trades about 0.13 of its potential returns per unit of risk. Fidelity Low Volatility is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 1,238 in Fidelity Low Volatility on August 30, 2024 and sell it today you would earn a total of 55.00 from holding Fidelity Low Volatility or generate 4.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aggressive Growth Allocation vs. Fidelity Low Volatility
Performance |
| Timeline |
| Aggressive Growth |
| Fidelity Low Volatility |
Aggressive Growth and Fidelity Low Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aggressive Growth and Fidelity Low
The main advantage of trading using opposite Aggressive Growth and Fidelity Low positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aggressive Growth position performs unexpectedly, Fidelity Low 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 Fidelity Low will offset losses from the drop in Fidelity Low's long position.| Aggressive Growth vs. Mesirow Financial Small | Aggressive Growth vs. Prudential Jennison Financial | Aggressive Growth vs. Hennessy Large Cap | Aggressive Growth vs. Financials Ultrasector Profund |
| Fidelity Low vs. Fidelity Infrastructure | Fidelity Low vs. Fidelity Founders | Fidelity Low vs. Fidelity Enduring Opportunities | Fidelity Low vs. Fidelity Womens Leadership |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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