Correlation Between Fidelity Contrafund and Dodge Income

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

By analyzing existing cross correlation between Fidelity Contrafund and Dodge Income Fund, you can compare the effects of market volatilities on Fidelity Contrafund and Dodge Income 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 Dodge Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Contrafund and Dodge Income.

Diversification Opportunities for Fidelity Contrafund and Dodge Income

-0.35

Correlation Coefficient

Fidelity Contrafund  Dodge Income

Very good diversification

The 3 months correlation between Fidelity and Dodge is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Contrafund and Dodge Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dodge Income 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 Dodge Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dodge Income has no effect on the direction of Fidelity Contrafund i.e., Fidelity Contrafund and Dodge Income go up and down completely randomly.

Pair Corralation between Fidelity Contrafund and Dodge Income

Assuming the 90 days horizon Fidelity Contrafund is expected to generate 2.81 times more return on investment than Dodge Income. However, Fidelity Contrafund is 2.81 times more volatile than Dodge Income Fund. It trades about 0.14 of its potential returns per unit of risk. Dodge Income Fund is currently generating about 0.03 per unit of risk. If you would invest  1,525  in Fidelity Contrafund on September 30, 2024 and sell it today you would earn a total of  612.00  from holding Fidelity Contrafund or generate 40.13% return on investment over 90 days.

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

Fidelity Contrafund  vs.  Dodge Income Fund

Fidelity Contrafund

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Contrafund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. 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.

Dodge Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dodge Income Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Dodge Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fidelity Contrafund and Dodge Income

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

The idea behind Fidelity Contrafund and Dodge Income Fund 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.