Correlation Between Small-cap Value and Fidelity Small
Can any of the company-specific risk be diversified away by investing in both Small-cap Value 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 Small-cap Value and Fidelity Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Value Series and Fidelity Small Cap, you can compare the effects of market volatilities on Small-cap Value 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 Small-cap Value with a short position of Fidelity Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small-cap Value and Fidelity Small.
Diversification Opportunities for Small-cap Value and Fidelity Small
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Small-cap and Fidelity is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Value Series 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 Small-cap Value 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 Small Cap Value Series 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 Small-cap Value i.e., Small-cap Value and Fidelity Small go up and down completely randomly.
Pair Corralation between Small-cap Value and Fidelity Small
Assuming the 90 days horizon Small Cap Value Series is expected to generate 0.89 times more return on investment than Fidelity Small. However, Small Cap Value Series is 1.12 times less risky than Fidelity Small. It trades about 0.07 of its potential returns per unit of risk. Fidelity Small Cap is currently generating about 0.05 per unit of risk. If you would invest 1,312 in Small Cap Value Series on August 30, 2024 and sell it today you would earn a total of 546.00 from holding Small Cap Value Series or generate 41.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Value Series vs. Fidelity Small Cap
Performance |
| Timeline |
| Small Cap Value |
| Fidelity Small Cap |
Small-cap Value and Fidelity Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small-cap Value and Fidelity Small
The main advantage of trading using opposite Small-cap Value and Fidelity Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small-cap Value 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.| Small-cap Value vs. Astor Longshort Fund | Small-cap Value vs. Old Westbury Short Term | Small-cap Value vs. Angel Oak Ultrashort | Small-cap Value vs. Barings Active Short |
| Fidelity Small vs. Fidelity Large Cap | Fidelity Small vs. Fidelity Small Cap | Fidelity Small vs. Fidelity Mid Cap | Fidelity Small vs. Fidelity Mid 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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