Correlation Between Fidelity Extended and Fidelity Mega
Can any of the company-specific risk be diversified away by investing in both Fidelity Extended and Fidelity Mega 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 Extended and Fidelity Mega into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Extended Market and Fidelity Mega Cap, you can compare the effects of market volatilities on Fidelity Extended and Fidelity Mega 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 Extended with a short position of Fidelity Mega. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Extended and Fidelity Mega.
Diversification Opportunities for Fidelity Extended and Fidelity Mega
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 Extended Market and Fidelity Mega Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Mega Cap and Fidelity Extended 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 Extended Market are associated (or correlated) with Fidelity Mega. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Mega Cap has no effect on the direction of Fidelity Extended i.e., Fidelity Extended and Fidelity Mega go up and down completely randomly.
Pair Corralation between Fidelity Extended and Fidelity Mega
Assuming the 90 days horizon Fidelity Extended Market is expected to generate 1.55 times more return on investment than Fidelity Mega. However, Fidelity Extended is 1.55 times more volatile than Fidelity Mega Cap. It trades about 0.25 of its potential returns per unit of risk. Fidelity Mega Cap is currently generating about 0.21 per unit of risk. If you would invest 8,340 in Fidelity Extended Market on August 31, 2024 and sell it today you would earn a total of 1,455 from holding Fidelity Extended Market or generate 17.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Extended Market vs. Fidelity Mega Cap
Performance |
| Timeline |
| Fidelity Extended Market |
| Fidelity Mega Cap |
Fidelity Extended and Fidelity Mega Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Extended and Fidelity Mega
The main advantage of trading using opposite Fidelity Extended and Fidelity Mega positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Extended position performs unexpectedly, Fidelity Mega 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 Mega will offset losses from the drop in Fidelity Mega's long position.| Fidelity Extended vs. Fidelity International Index | Fidelity Extended vs. Fidelity 500 Index | Fidelity Extended vs. Fidelity Bond Index | Fidelity Extended vs. Fidelity Total Market |
| Fidelity Mega vs. Fidelity Large Cap | Fidelity Mega vs. Fidelity Focused Stock | Fidelity Mega vs. Fidelity Stock Selector | Fidelity Mega vs. Fidelity Trend 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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