Correlation Between Large Cap and Fidelity Capital
Can any of the company-specific risk be diversified away by investing in both Large Cap and Fidelity Capital 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 Large Cap and Fidelity Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Large Cap Value and Fidelity Capital Income, you can compare the effects of market volatilities on Large Cap and Fidelity Capital 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 Large Cap with a short position of Fidelity Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Large Cap and Fidelity Capital.
Diversification Opportunities for Large Cap and Fidelity Capital
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Large and Fidelity is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Value and Fidelity Capital Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Capital Income and Large Cap 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 Large Cap Value are associated (or correlated) with Fidelity Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Capital Income has no effect on the direction of Large Cap i.e., Large Cap and Fidelity Capital go up and down completely randomly.
Pair Corralation between Large Cap and Fidelity Capital
Assuming the 90 days horizon Large Cap Value is expected to generate 3.45 times more return on investment than Fidelity Capital. However, Large Cap is 3.45 times more volatile than Fidelity Capital Income. It trades about 0.12 of its potential returns per unit of risk. Fidelity Capital Income is currently generating about 0.32 per unit of risk. If you would invest 2,083 in Large Cap Value on September 1, 2024 and sell it today you would earn a total of 51.00 from holding Large Cap Value or generate 2.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Large Cap Value vs. Fidelity Capital Income
Performance |
| Timeline |
| Large Cap Value |
| Fidelity Capital Income |
Large Cap and Fidelity Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Large Cap and Fidelity Capital
The main advantage of trading using opposite Large Cap and Fidelity Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Large Cap position performs unexpectedly, Fidelity Capital 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 Capital will offset losses from the drop in Fidelity Capital's long position.| Large Cap vs. Transamerica Financial Life | Large Cap vs. 1919 Financial Services | Large Cap vs. Gabelli Global Financial | Large Cap vs. Mesirow Financial Small |
| Fidelity Capital vs. Fidelity High Income | Fidelity Capital vs. Fidelity New Markets | Fidelity Capital vs. Fidelity Total Bond | Fidelity Capital vs. Fidelity Balanced Fund |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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