Correlation Between Fidelity Series and Touchstone Small

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

By analyzing existing cross correlation between Fidelity Series 1000 and Touchstone Small Cap, you can compare the effects of market volatilities on Fidelity Series and Touchstone Small 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 Series with a short position of Touchstone Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Series and Touchstone Small.

Diversification Opportunities for Fidelity Series and Touchstone Small

0.76

Correlation Coefficient

Fidelity Series  Touchstone Small

Poor diversification

The 3 months correlation between Fidelity and Touchstone is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Series 1000 and Touchstone Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Small Cap and Fidelity Series 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 Series 1000 are associated (or correlated) with Touchstone Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Small Cap has no effect on the direction of Fidelity Series i.e., Fidelity Series and Touchstone Small go up and down completely randomly.

Pair Corralation between Fidelity Series and Touchstone Small

Assuming the 90 days horizon Fidelity Series 1000 is expected to under-perform the Touchstone Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Fidelity Series 1000 is 1.42 times less risky than Touchstone Small. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Touchstone Small Cap is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3,799  in Touchstone Small Cap on October 6, 2024 and sell it today you would earn a total of  47.00  from holding Touchstone Small Cap or generate 1.24% return on investment over 90 days.

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

Fidelity Series 1000  vs.  Touchstone Small Cap

Fidelity Series 1000

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Series 1000 has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Fidelity Series is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Touchstone Small Cap

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Touchstone 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, Touchstone Small 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 Series and Touchstone Small

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

The idea behind Fidelity Series 1000 and Touchstone Small Cap 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.