Correlation Between Fidelity New and Teton Westwood

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

By analyzing existing cross correlation between Fidelity New Markets and Teton Westwood Equity, you can compare the effects of market volatilities on Fidelity New and Teton Westwood 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 New with a short position of Teton Westwood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity New and Teton Westwood.

Diversification Opportunities for Fidelity New and Teton Westwood

0.07

Correlation Coefficient

Fidelity New  Teton Westwood

Significant diversification

The 3 months correlation between Fidelity and Teton is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity New Markets and Teton Westwood Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teton Westwood Equity and Fidelity New 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 New Markets are associated (or correlated) with Teton Westwood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teton Westwood Equity has no effect on the direction of Fidelity New i.e., Fidelity New and Teton Westwood go up and down completely randomly.

Pair Corralation between Fidelity New and Teton Westwood

Assuming the 90 days horizon Fidelity New Markets is expected to generate 0.21 times more return on investment than Teton Westwood. However, Fidelity New Markets is 4.84 times less risky than Teton Westwood. It trades about -0.12 of its potential returns per unit of risk. Teton Westwood Equity is currently generating about -0.23 per unit of risk. If you would invest  1,288  in Fidelity New Markets on October 9, 2024 and sell it today you would lose (17.00) from holding Fidelity New Markets or give up 1.32% of portfolio value over 90 days.

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

Fidelity New Markets  vs.  Teton Westwood Equity

Fidelity New Markets

Risk-Adjusted Performance

0 of 100

Very Weak

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

Teton Westwood Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teton Westwood Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward 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 New and Teton Westwood

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

The idea behind Fidelity New Markets and Teton Westwood Equity 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.