Correlation Between Growth Allocation and Fidelity Small
Can any of the company-specific risk be diversified away by investing in both Growth Allocation and Fidelity Small 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 Growth Allocation and Fidelity Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Allocation Index and Fidelity Small Cap, you can compare the effects of market volatilities on Growth Allocation and Fidelity Small 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 Growth Allocation with a short position of Fidelity Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Allocation and Fidelity Small.
Diversification Opportunities for Growth Allocation and Fidelity Small
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Growth and Fidelity is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Growth Allocation Index and Fidelity Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Small Cap and Growth Allocation 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 Growth Allocation Index are associated (or correlated) with Fidelity Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Small Cap has no effect on the direction of Growth Allocation i.e., Growth Allocation and Fidelity Small go up and down completely randomly.
Pair Corralation between Growth Allocation and Fidelity Small
Assuming the 90 days horizon Growth Allocation is expected to generate 1.47 times less return on investment than Fidelity Small. But when comparing it to its historical volatility, Growth Allocation Index is 2.06 times less risky than Fidelity Small. It trades about 0.1 of its potential returns per unit of risk. Fidelity Small Cap is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,856 in Fidelity Small Cap on August 26, 2024 and sell it today you would earn a total of 841.00 from holding Fidelity Small Cap or generate 45.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Allocation Index vs. Fidelity Small Cap
Performance |
| Timeline |
| Growth Allocation Index |
| Fidelity Small Cap |
Growth Allocation and Fidelity Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Allocation and Fidelity Small
The main advantage of trading using opposite Growth Allocation and Fidelity Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Allocation position performs unexpectedly, Fidelity Small 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 Small will offset losses from the drop in Fidelity Small's long position.| Growth Allocation vs. Fidelity Freedom 2015 | Growth Allocation vs. Fidelity Puritan Fund | Growth Allocation vs. Fidelity Puritan Fund | Growth Allocation vs. Fidelity Pennsylvania Municipal |
| Fidelity Small vs. Fidelity Small Cap | Fidelity Small vs. Fidelity Small Cap | Fidelity Small vs. Fidelity Advisor Mid | Fidelity Small vs. Fidelity 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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