Correlation Between Fidelity 500 and Fidelity Large
Can any of the company-specific risk be diversified away by investing in both Fidelity 500 and Fidelity Large 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 500 and Fidelity Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity 500 Index and Fidelity Large Cap, you can compare the effects of market volatilities on Fidelity 500 and Fidelity Large 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 500 with a short position of Fidelity Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity 500 and Fidelity Large.
Diversification Opportunities for Fidelity 500 and Fidelity Large
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Fidelity and Fidelity is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity 500 Index and Fidelity Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Large Cap and Fidelity 500 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 500 Index are associated (or correlated) with Fidelity Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Large Cap has no effect on the direction of Fidelity 500 i.e., Fidelity 500 and Fidelity Large go up and down completely randomly.
Pair Corralation between Fidelity 500 and Fidelity Large
Assuming the 90 days horizon Fidelity 500 is expected to generate 1.13 times less return on investment than Fidelity Large. But when comparing it to its historical volatility, Fidelity 500 Index is 1.39 times less risky than Fidelity Large. It trades about 0.14 of its potential returns per unit of risk. Fidelity Large Cap is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,023 in Fidelity Large Cap on August 28, 2024 and sell it today you would earn a total of 833.00 from holding Fidelity Large Cap or generate 27.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity 500 Index vs. Fidelity Large Cap
Performance |
| Timeline |
| Fidelity 500 Index |
| Fidelity Large Cap |
Fidelity 500 and Fidelity Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity 500 and Fidelity Large
The main advantage of trading using opposite Fidelity 500 and Fidelity Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity 500 position performs unexpectedly, Fidelity Large 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 Large will offset losses from the drop in Fidelity Large's long position.| Fidelity 500 vs. Fidelity Total Market | Fidelity 500 vs. Fidelity Extended Market | Fidelity 500 vs. Fidelity Zero Total | Fidelity 500 vs. Fidelity Small Cap |
| Fidelity Large vs. Fidelity Large Cap | Fidelity Large vs. Fidelity Small Cap | Fidelity Large vs. Fidelity Mid Cap | Fidelity Large 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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