Correlation Between Fidelity Stock and Fidelity Mid-cap

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

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

Diversification Opportunities for Fidelity Stock and Fidelity Mid-cap

0.83

Correlation Coefficient

Fidelity Stock  Fidelity Mid-cap

Very poor diversification

The 3 months correlation between Fidelity and Fidelity is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Stock Selector and Fidelity Mid Cap Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Mid Cap and Fidelity Stock 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 Stock Selector are associated (or correlated) with Fidelity Mid-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Mid Cap has no effect on the direction of Fidelity Stock i.e., Fidelity Stock and Fidelity Mid-cap go up and down completely randomly.

Pair Corralation between Fidelity Stock and Fidelity Mid-cap

Assuming the 90 days horizon Fidelity Stock Selector is expected to under-perform the Fidelity Mid-cap. In addition to that, Fidelity Stock is 1.27 times more volatile than Fidelity Mid Cap Stock. It trades about -0.02 of its total potential returns per unit of risk. Fidelity Mid Cap Stock is currently generating about 0.01 per unit of volatility. If you would invest  4,395  in Fidelity Mid Cap Stock on October 20, 2024 and sell it today you would earn a total of  13.00  from holding Fidelity Mid Cap Stock or generate 0.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Fidelity Stock Selector  vs.  Fidelity Mid Cap Stock

Fidelity Stock Selector

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fidelity Mid Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Mid Cap Stock has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Fidelity Mid-cap 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 Stock and Fidelity Mid-cap

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

The idea behind Fidelity Stock Selector and Fidelity Mid Cap Stock 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.