Correlation Between Microsoft and Fidelity Growth
Can any of the company-specific risk be diversified away by investing in both Microsoft and Fidelity Growth 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 Microsoft and Fidelity Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Fidelity Growth Discovery, you can compare the effects of market volatilities on Microsoft and Fidelity Growth 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 Microsoft with a short position of Fidelity Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Fidelity Growth.
Diversification Opportunities for Microsoft and Fidelity Growth
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Microsoft and Fidelity is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Fidelity Growth Discovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Growth Discovery and Microsoft 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 Microsoft are associated (or correlated) with Fidelity Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Growth Discovery has no effect on the direction of Microsoft i.e., Microsoft and Fidelity Growth go up and down completely randomly.
Pair Corralation between Microsoft and Fidelity Growth
Given the investment horizon of 90 days Microsoft is expected to generate 1.08 times less return on investment than Fidelity Growth. In addition to that, Microsoft is 1.4 times more volatile than Fidelity Growth Discovery. It trades about 0.15 of its total potential returns per unit of risk. Fidelity Growth Discovery is currently generating about 0.22 per unit of volatility. If you would invest 6,244 in Fidelity Growth Discovery on September 2, 2024 and sell it today you would earn a total of 235.00 from holding Fidelity Growth Discovery or generate 3.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Fidelity Growth Discovery
Performance |
| Timeline |
| Microsoft |
| Fidelity Growth Discovery |
Microsoft and Fidelity Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Fidelity Growth
The main advantage of trading using opposite Microsoft and Fidelity Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Fidelity Growth 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 Growth will offset losses from the drop in Fidelity Growth's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Fidelity Growth vs. Fidelity Focused Stock | Fidelity Growth vs. Fidelity Trend Fund | Fidelity Growth vs. Fidelity Mega Cap | Fidelity Growth vs. Fidelity Value Discovery |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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