Correlation Between Fidelity Small and Pgim Securitized

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

Diversification Opportunities for Fidelity Small and Pgim Securitized

0.47

Correlation Coefficient

Fidelity Small  Pgim Securitized

Very weak diversification

The 3 months correlation between Fidelity and Pgim is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Small Cap and Pgim Securitized Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pgim Securitized Credit 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 Pgim Securitized. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pgim Securitized Credit has no effect on the direction of Fidelity Small i.e., Fidelity Small and Pgim Securitized go up and down completely randomly.

Pair Corralation between Fidelity Small and Pgim Securitized

Assuming the 90 days horizon Fidelity Small Cap is expected to generate 19.74 times more return on investment than Pgim Securitized. However, Fidelity Small is 19.74 times more volatile than Pgim Securitized Credit. It trades about 0.02 of its potential returns per unit of risk. Pgim Securitized Credit is currently generating about 0.18 per unit of risk. If you would invest  2,043  in Fidelity Small Cap on October 9, 2024 and sell it today you would earn a total of  20.00  from holding Fidelity Small Cap or generate 0.98% 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.  Pgim Securitized Credit

Fidelity Small Cap

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Small Cap are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. 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.

Pgim Securitized Credit

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pgim Securitized Credit are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pgim Securitized 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 Pgim Securitized

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

The idea behind Fidelity Small Cap and Pgim Securitized Credit 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.