Correlation Between Fidelity Extended and Fidelity Small
Can any of the company-specific risk be diversified away by investing in both Fidelity Extended 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 Fidelity Extended and Fidelity Small 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 Small Cap, you can compare the effects of market volatilities on Fidelity Extended 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 Fidelity Extended with a short position of Fidelity Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Extended and Fidelity Small.
Diversification Opportunities for Fidelity Extended and Fidelity Small
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Fidelity is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Extended Market 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 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 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 Fidelity Extended i.e., Fidelity Extended and Fidelity Small go up and down completely randomly.
Pair Corralation between Fidelity Extended and Fidelity Small
Assuming the 90 days horizon Fidelity Extended Market is expected to generate 0.84 times more return on investment than Fidelity Small. However, Fidelity Extended Market is 1.19 times less risky than Fidelity Small. It trades about 0.19 of its potential returns per unit of risk. Fidelity Small Cap is currently generating about 0.11 per unit of risk. If you would invest 8,701 in Fidelity Extended Market on August 25, 2024 and sell it today you would earn a total of 883.00 from holding Fidelity Extended Market or generate 10.15% 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 Small Cap
Performance |
| Timeline |
| Fidelity Extended Market |
| Fidelity Small Cap |
Fidelity Extended and Fidelity Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Extended and Fidelity Small
The main advantage of trading using opposite Fidelity Extended and Fidelity Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Extended 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.| 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 Small vs. Fidelity Mid Cap | Fidelity Small vs. Fidelity International Index | Fidelity Small vs. Fidelity Bond Index | Fidelity Small vs. Fidelity Large 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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