Correlation Between Smallcap World and Fidelity Series
Can any of the company-specific risk be diversified away by investing in both Smallcap World and Fidelity Series 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 Smallcap World and Fidelity Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap World Fund and Fidelity Series Growth, you can compare the effects of market volatilities on Smallcap World and Fidelity Series 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 Smallcap World with a short position of Fidelity Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap World and Fidelity Series.
Diversification Opportunities for Smallcap World and Fidelity Series
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Smallcap and Fidelity is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap World Fund and Fidelity Series Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Series Growth and Smallcap World 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 Smallcap World Fund are associated (or correlated) with Fidelity Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Series Growth has no effect on the direction of Smallcap World i.e., Smallcap World and Fidelity Series go up and down completely randomly.
Pair Corralation between Smallcap World and Fidelity Series
Assuming the 90 days horizon Smallcap World is expected to generate 1.79 times less return on investment than Fidelity Series. In addition to that, Smallcap World is 1.09 times more volatile than Fidelity Series Growth. It trades about 0.05 of its total potential returns per unit of risk. Fidelity Series Growth is currently generating about 0.1 per unit of volatility. If you would invest 1,639 in Fidelity Series Growth on September 4, 2024 and sell it today you would earn a total of 801.00 from holding Fidelity Series Growth or generate 48.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smallcap World Fund vs. Fidelity Series Growth
Performance |
| Timeline |
| Smallcap World |
| Fidelity Series Growth |
Smallcap World and Fidelity Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap World and Fidelity Series
The main advantage of trading using opposite Smallcap World and Fidelity Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap World position performs unexpectedly, Fidelity Series 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 Series will offset losses from the drop in Fidelity Series' long position.| Smallcap World vs. New World Fund | Smallcap World vs. Washington Mutual Investors | Smallcap World vs. Europacific Growth Fund | Smallcap World vs. New Perspective Fund |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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