Correlation Between Fidelity Small and Fidelity Extended
Can any of the company-specific risk be diversified away by investing in both Fidelity Small and Fidelity Extended 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 Small and Fidelity Extended into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Small Cap and Fidelity Extended Market, you can compare the effects of market volatilities on Fidelity Small and Fidelity Extended 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 Small with a short position of Fidelity Extended. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Small and Fidelity Extended.
Diversification Opportunities for Fidelity Small and Fidelity Extended
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 Small Cap and Fidelity Extended Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Extended Market and Fidelity Small 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 Small Cap are associated (or correlated) with Fidelity Extended. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Extended Market has no effect on the direction of Fidelity Small i.e., Fidelity Small and Fidelity Extended go up and down completely randomly.
Pair Corralation between Fidelity Small and Fidelity Extended
Assuming the 90 days horizon Fidelity Small is expected to generate 1.35 times less return on investment than Fidelity Extended. In addition to that, Fidelity Small is 1.2 times more volatile than Fidelity Extended Market. It trades about 0.22 of its total potential returns per unit of risk. Fidelity Extended Market is currently generating about 0.35 per unit of volatility. If you would invest 8,895 in Fidelity Extended Market on August 29, 2024 and sell it today you would earn a total of 974.00 from holding Fidelity Extended Market or generate 10.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Fidelity Small Cap vs. Fidelity Extended Market
Performance |
| Timeline |
| Fidelity Small Cap |
| Fidelity Extended Market |
Fidelity Small and Fidelity Extended Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Small and Fidelity Extended
The main advantage of trading using opposite Fidelity Small and Fidelity Extended positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Small position performs unexpectedly, Fidelity Extended 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 Extended will offset losses from the drop in Fidelity Extended's long position.| Fidelity Small vs. Fidelity Mid Cap | Fidelity Small vs. Fidelity International Index | Fidelity Small vs. Fidelity Bond Index | Fidelity Small vs. Fidelity Large Cap |
| Fidelity Extended vs. Fidelity International Index | Fidelity Extended vs. Fidelity 500 Index | Fidelity Extended vs. Fidelity Bond Index | Fidelity Extended vs. Fidelity Total Market |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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