Correlation Between Fidelity Real and The Growth

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

By analyzing existing cross correlation between Fidelity Real Estate and The Growth Fund, you can compare the effects of market volatilities on Fidelity Real and The Growth 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 Real with a short position of The Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Real and The Growth.

Diversification Opportunities for Fidelity Real and The Growth

0.24

Correlation Coefficient

Fidelity Real  The Growth

Modest diversification

The 3 months correlation between Fidelity and The is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Real Estate and The Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund and Fidelity Real 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 Real Estate are associated (or correlated) with The Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund has no effect on the direction of Fidelity Real i.e., Fidelity Real and The Growth go up and down completely randomly.

Pair Corralation between Fidelity Real and The Growth

Assuming the 90 days horizon Fidelity Real is expected to generate 1.01 times less return on investment than The Growth. But when comparing it to its historical volatility, Fidelity Real Estate is 3.17 times less risky than The Growth. It trades about 0.17 of its potential returns per unit of risk. The Growth Fund is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4,107  in The Growth Fund on December 3, 2024 and sell it today you would earn a total of  809.00  from holding The Growth Fund or generate 19.7% return on investment over 90 days.

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

Fidelity Real Estate  vs.  The Growth Fund

Fidelity Real Estate

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Real Estate are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Fidelity Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Growth Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Fidelity Real and The Growth

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

The idea behind Fidelity Real Estate and The Growth Fund 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.