Correlation Between Fidelity Series and Fidelity Contrafund
Can any of the company-specific risk be diversified away by investing in both Fidelity Series and Fidelity Contrafund 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 Series and Fidelity Contrafund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Series Blue and Fidelity Contrafund, you can compare the effects of market volatilities on Fidelity Series and Fidelity Contrafund 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 Series with a short position of Fidelity Contrafund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Series and Fidelity Contrafund.
Diversification Opportunities for Fidelity Series and Fidelity Contrafund
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FIDELITY and Fidelity is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Series Blue and Fidelity Contrafund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Contrafund and Fidelity Series 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 Series Blue are associated (or correlated) with Fidelity Contrafund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Contrafund has no effect on the direction of Fidelity Series i.e., Fidelity Series and Fidelity Contrafund go up and down completely randomly.
Pair Corralation between Fidelity Series and Fidelity Contrafund
Assuming the 90 days horizon Fidelity Series Blue is expected to generate 1.31 times more return on investment than Fidelity Contrafund. However, Fidelity Series is 1.31 times more volatile than Fidelity Contrafund. It trades about 0.13 of its potential returns per unit of risk. Fidelity Contrafund is currently generating about 0.14 per unit of risk. If you would invest 937.00 in Fidelity Series Blue on September 5, 2024 and sell it today you would earn a total of 1,065 from holding Fidelity Series Blue or generate 113.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Fidelity Series Blue vs. Fidelity Contrafund
Performance |
| Timeline |
| Fidelity Series Blue |
| Fidelity Contrafund |
Fidelity Series and Fidelity Contrafund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Series and Fidelity Contrafund
The main advantage of trading using opposite Fidelity Series and Fidelity Contrafund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Series position performs unexpectedly, Fidelity Contrafund 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 Contrafund will offset losses from the drop in Fidelity Contrafund's long position.The idea behind Fidelity Series Blue and Fidelity Contrafund 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.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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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