Correlation Between Midcap Sp and Fidelity Extended
Can any of the company-specific risk be diversified away by investing in both Midcap Sp 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 Midcap Sp and Fidelity Extended into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Midcap Sp 400 and Fidelity Extended Market, you can compare the effects of market volatilities on Midcap Sp 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 Midcap Sp with a short position of Fidelity Extended. Check out your portfolio center. Please also check ongoing floating volatility patterns of Midcap Sp and Fidelity Extended.
Diversification Opportunities for Midcap Sp and Fidelity Extended
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Midcap and Fidelity is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Midcap Sp 400 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 Midcap Sp 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 Midcap Sp 400 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 Midcap Sp i.e., Midcap Sp and Fidelity Extended go up and down completely randomly.
Pair Corralation between Midcap Sp and Fidelity Extended
Assuming the 90 days horizon Midcap Sp 400 is expected to generate 0.83 times more return on investment than Fidelity Extended. However, Midcap Sp 400 is 1.2 times less risky than Fidelity Extended. It trades about -0.28 of its potential returns per unit of risk. Fidelity Extended Market is currently generating about -0.3 per unit of risk. If you would invest 2,299 in Midcap Sp 400 on December 1, 2024 and sell it today you would lose (120.00) from holding Midcap Sp 400 or give up 5.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Midcap Sp 400 vs. Fidelity Extended Market
Performance |
| Timeline |
| Midcap Sp 400 |
| Fidelity Extended Market |
Midcap Sp and Fidelity Extended Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Midcap Sp and Fidelity Extended
The main advantage of trading using opposite Midcap Sp and Fidelity Extended positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Midcap Sp 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.| Midcap Sp vs. Strategic Asset Management | Midcap Sp vs. Strategic Asset Management | Midcap Sp vs. Strategic Asset Management | Midcap Sp vs. Strategic Asset Management |
| 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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