Correlation Between Fidelity 500 and Voya Large-cap
Can any of the company-specific risk be diversified away by investing in both Fidelity 500 and Voya Large-cap 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 Voya Large-cap 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 Voya Large Cap Growth, you can compare the effects of market volatilities on Fidelity 500 and Voya Large-cap 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 Voya Large-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity 500 and Voya Large-cap.
Diversification Opportunities for Fidelity 500 and Voya Large-cap
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Fidelity and Voya is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity 500 Index and Voya Large Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya 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 Voya Large-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Large Cap has no effect on the direction of Fidelity 500 i.e., Fidelity 500 and Voya Large-cap go up and down completely randomly.
Pair Corralation between Fidelity 500 and Voya Large-cap
Assuming the 90 days horizon Fidelity 500 Index is expected to generate 0.59 times more return on investment than Voya Large-cap. However, Fidelity 500 Index is 1.69 times less risky than Voya Large-cap. It trades about 0.11 of its potential returns per unit of risk. Voya Large Cap Growth is currently generating about 0.06 per unit of risk. If you would invest 13,478 in Fidelity 500 Index on September 2, 2024 and sell it today you would earn a total of 7,513 from holding Fidelity 500 Index or generate 55.74% 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. Voya Large Cap Growth
Performance |
| Timeline |
| Fidelity 500 Index |
| Voya Large Cap |
Fidelity 500 and Voya Large-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity 500 and Voya Large-cap
The main advantage of trading using opposite Fidelity 500 and Voya Large-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity 500 position performs unexpectedly, Voya Large-cap 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 Voya Large-cap will offset losses from the drop in Voya Large-cap'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 |
| Voya Large-cap vs. Voya Bond Index | Voya Large-cap vs. Voya Bond Index | Voya Large-cap vs. Voya Limited Maturity | Voya Large-cap vs. Voya Limited Maturity |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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