Correlation Between Fidelity Large and Thornburg Core

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

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

Diversification Opportunities for Fidelity Large and Thornburg Core

0.71

Correlation Coefficient

Fidelity Large  Thornburg Core

Poor diversification

The 3 months correlation between Fidelity and Thornburg is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Large Cap and Thornburg E Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg E Growth and Fidelity Large 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 Large Cap are associated (or correlated) with Thornburg Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg E Growth has no effect on the direction of Fidelity Large i.e., Fidelity Large and Thornburg Core go up and down completely randomly.

Pair Corralation between Fidelity Large and Thornburg Core

Assuming the 90 days horizon Fidelity Large is expected to generate 1.05 times less return on investment than Thornburg Core. But when comparing it to its historical volatility, Fidelity Large Cap is 1.17 times less risky than Thornburg Core. It trades about 0.28 of its potential returns per unit of risk. Thornburg E Growth is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  3,168  in Thornburg E Growth on October 25, 2024 and sell it today you would earn a total of  142.00  from holding Thornburg E Growth or generate 4.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Fidelity Large Cap  vs.  Thornburg E Growth

Fidelity Large Cap

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Large Cap are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, Fidelity Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Thornburg E Growth

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thornburg E Growth are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Thornburg Core may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Fidelity Large and Thornburg Core

The main advantage of trading using opposite Fidelity Large and Thornburg Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Large position performs unexpectedly, Thornburg Core 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 Thornburg Core will offset losses from the drop in Thornburg Core's long position.

The idea behind Fidelity Large Cap and Thornburg E Growth 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.