Correlation Between Balanced Fund and Fidelity Small
Can any of the company-specific risk be diversified away by investing in both Balanced Fund 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 Balanced Fund and Fidelity Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Fund Investor and Fidelity Small Cap, you can compare the effects of market volatilities on Balanced Fund 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 Balanced Fund with a short position of Fidelity Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Fidelity Small.
Diversification Opportunities for Balanced Fund and Fidelity Small
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Balanced and Fidelity is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Investor 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 Balanced Fund 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 Balanced Fund Investor 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 Balanced Fund i.e., Balanced Fund and Fidelity Small go up and down completely randomly.
Pair Corralation between Balanced Fund and Fidelity Small
Assuming the 90 days horizon Balanced Fund is expected to generate 1.05 times less return on investment than Fidelity Small. But when comparing it to its historical volatility, Balanced Fund Investor is 2.69 times less risky than Fidelity Small. It trades about 0.14 of its potential returns per unit of risk. Fidelity Small Cap is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,963 in Fidelity Small Cap on September 2, 2024 and sell it today you would earn a total of 78.00 from holding Fidelity Small Cap or generate 3.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balanced Fund Investor vs. Fidelity Small Cap
Performance |
| Timeline |
| Balanced Fund Investor |
| Fidelity Small Cap |
Balanced Fund and Fidelity Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Fund and Fidelity Small
The main advantage of trading using opposite Balanced Fund and Fidelity Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund 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.| Balanced Fund vs. Select Fund Investor | Balanced Fund vs. Heritage Fund Investor | Balanced Fund vs. Value Fund Investor | Balanced Fund vs. Growth Fund Investor |
| Fidelity Small vs. Sprott Gold Equity | Fidelity Small vs. Oppenheimer Gold Special | Fidelity Small vs. Gabelli Gold Fund | Fidelity Small vs. Goldman Sachs Clean |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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