Correlation Between Fidelity Contrafund and Adirondack Small

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Fidelity Contrafund and Adirondack 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 Fidelity Contrafund and Adirondack Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Contrafund and Adirondack Small Cap, you can compare the effects of market volatilities on Fidelity Contrafund and Adirondack 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 Fidelity Contrafund with a short position of Adirondack Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Contrafund and Adirondack Small.

Diversification Opportunities for Fidelity Contrafund and Adirondack Small

0.11
  Correlation Coefficient

Average diversification

The 3 months correlation between Fidelity and Adirondack is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Contrafund and Adirondack Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adirondack Small Cap and Fidelity Contrafund 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 Contrafund are associated (or correlated) with Adirondack Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adirondack Small Cap has no effect on the direction of Fidelity Contrafund i.e., Fidelity Contrafund and Adirondack Small go up and down completely randomly.

Pair Corralation between Fidelity Contrafund and Adirondack Small

Assuming the 90 days horizon Fidelity Contrafund is expected to generate 1.09 times more return on investment than Adirondack Small. However, Fidelity Contrafund is 1.09 times more volatile than Adirondack Small Cap. It trades about -0.03 of its potential returns per unit of risk. Adirondack Small Cap is currently generating about -0.11 per unit of risk. If you would invest  2,189  in Fidelity Contrafund on November 28, 2024 and sell it today you would lose (42.00) from holding Fidelity Contrafund or give up 1.92% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Fidelity Contrafund  vs.  Adirondack Small Cap

 Performance 
       Timeline  
Fidelity Contrafund 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Over the last 90 days Fidelity Contrafund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Fidelity Contrafund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Adirondack Small Cap 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Adirondack Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Fidelity Contrafund and Adirondack Small Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fidelity Contrafund and Adirondack Small

The main advantage of trading using opposite Fidelity Contrafund and Adirondack Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Contrafund position performs unexpectedly, Adirondack 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 Adirondack Small will offset losses from the drop in Adirondack Small's long position.
The idea behind Fidelity Contrafund and Adirondack Small Cap 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.
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

Other Complementary Tools

Top Crypto Exchanges
Search and analyze digital assets across top global cryptocurrency exchanges
Transaction History
View history of all your transactions and understand their impact on performance
Stocks Directory
Find actively traded stocks across global markets
AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device