Correlation Between Fidelity Capital and Fidelity Series

Can any of the company-specific risk be diversified away by investing in both Fidelity Capital 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 Fidelity Capital and Fidelity Series into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fidelity Capital Income and Fidelity Series Large, you can compare the effects of market volatilities on Fidelity Capital 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 Fidelity Capital with a short position of Fidelity Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Capital and Fidelity Series.

Diversification Opportunities for Fidelity Capital and Fidelity Series

0.74

Correlation Coefficient

Fidelity Capital  Fidelity Series

Poor diversification

The 3 months correlation between Fidelity and Fidelity is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Capital Income and Fidelity Series Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Series Large and Fidelity Capital 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 Fidelity Capital Income 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 Large has no effect on the direction of Fidelity Capital i.e., Fidelity Capital and Fidelity Series go up and down completely randomly.

Pair Corralation between Fidelity Capital and Fidelity Series

Assuming the 90 days horizon Fidelity Capital is expected to generate 2.68 times less return on investment than Fidelity Series. But when comparing it to its historical volatility, Fidelity Capital Income is 3.44 times less risky than Fidelity Series. It trades about 0.12 of its potential returns per unit of risk. Fidelity Series Large is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,060  in Fidelity Series Large on October 7, 2024 and sell it today you would earn a total of  517.00  from holding Fidelity Series Large or generate 25.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Fidelity Capital Income  vs.  Fidelity Series Large

Fidelity Capital Income

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Capital Income are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Fidelity Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Series Large

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Series Large are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Fidelity Series may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Fidelity Capital and Fidelity Series

The main advantage of trading using opposite Fidelity Capital and Fidelity Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Capital 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.

The idea behind Fidelity Capital Income and Fidelity Series Large pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.