Correlation Between Fidelity Small and Pear Tree
Can any of the company-specific risk be diversified away by investing in both Fidelity Small and Pear Tree 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 Pear Tree 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 Pear Tree Essex, you can compare the effects of market volatilities on Fidelity Small and Pear Tree 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 Pear Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Small and Pear Tree.
Diversification Opportunities for Fidelity Small and Pear Tree
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Pear is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Small Cap and Pear Tree Essex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pear Tree Essex 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 Pear Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pear Tree Essex has no effect on the direction of Fidelity Small i.e., Fidelity Small and Pear Tree go up and down completely randomly.
Pair Corralation between Fidelity Small and Pear Tree
Assuming the 90 days horizon Fidelity Small Cap is expected to generate 1.37 times more return on investment than Pear Tree. However, Fidelity Small is 1.37 times more volatile than Pear Tree Essex. It trades about 0.24 of its potential returns per unit of risk. Pear Tree Essex is currently generating about 0.09 per unit of risk. If you would invest 2,787 in Fidelity Small Cap on August 31, 2024 and sell it today you would earn a total of 245.00 from holding Fidelity Small Cap or generate 8.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Small Cap vs. Pear Tree Essex
Performance |
| Timeline |
| Fidelity Small Cap |
| Pear Tree Essex |
Fidelity Small and Pear Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Small and Pear Tree
The main advantage of trading using opposite Fidelity Small and Pear Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Small position performs unexpectedly, Pear Tree 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 Pear Tree will offset losses from the drop in Pear Tree'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 |
| Pear Tree vs. Harbor Vertible Securities | Pear Tree vs. Columbia Vertible Securities | Pear Tree vs. Virtus Convertible | Pear Tree vs. Allianzgi Convertible Income |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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