Correlation Between Fidelity Small and Great-west Goldman

Can any of the company-specific risk be diversified away by investing in both Fidelity Small and Great-west Goldman 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 Great-west Goldman 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 Great West Goldman Sachs, you can compare the effects of market volatilities on Fidelity Small and Great-west Goldman 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 Great-west Goldman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Small and Great-west Goldman.

Diversification Opportunities for Fidelity Small and Great-west Goldman

0.71

Correlation Coefficient

Fidelity Small  Great-west Goldman

Poor diversification

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

Pair Corralation between Fidelity Small and Great-west Goldman

Assuming the 90 days horizon Fidelity Small is expected to generate 1.31 times less return on investment than Great-west Goldman. In addition to that, Fidelity Small is 1.24 times more volatile than Great West Goldman Sachs. It trades about 0.02 of its total potential returns per unit of risk. Great West Goldman Sachs is currently generating about 0.04 per unit of volatility. If you would invest  1,180  in Great West Goldman Sachs on October 11, 2024 and sell it today you would earn a total of  210.00  from holding Great West Goldman Sachs or generate 17.8% return on investment over 90 days.

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

Fidelity Small Cap  vs.  Great West Goldman Sachs

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.

Great West Goldman

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Great West Goldman Sachs 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.

Pair Trading with Fidelity Small and Great-west Goldman

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

The idea behind Fidelity Small Cap and Great West Goldman Sachs 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.