Correlation Between Fidelity Small and Blackrock Strategic

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

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

Diversification Opportunities for Fidelity Small and Blackrock Strategic

0.59

Correlation Coefficient

Fidelity Small  Blackrock Strategic

Very weak diversification

The 3 months correlation between Fidelity and Blackrock is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Small Cap and Blackrock Strategic Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Strategic Muni and Fidelity Small 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 Small Cap are associated (or correlated) with Blackrock Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Strategic Muni has no effect on the direction of Fidelity Small i.e., Fidelity Small and Blackrock Strategic go up and down completely randomly.

Pair Corralation between Fidelity Small and Blackrock Strategic

Assuming the 90 days horizon Fidelity Small Cap is expected to generate 4.25 times more return on investment than Blackrock Strategic. However, Fidelity Small is 4.25 times more volatile than Blackrock Strategic Muni. It trades about 0.03 of its potential returns per unit of risk. Blackrock Strategic Muni is currently generating about 0.04 per unit of risk. If you would invest  1,932  in Fidelity Small Cap on October 12, 2024 and sell it today you would earn a total of  125.00  from holding Fidelity Small Cap or generate 6.47% return on investment over 90 days.

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

Fidelity Small Cap  vs.  Blackrock Strategic Muni

Fidelity Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Blackrock Strategic Muni

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Strategic Muni has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Blackrock Strategic 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 Small and Blackrock Strategic

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

The idea behind Fidelity Small Cap and Blackrock Strategic Muni 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.