Correlation Between Fidelity Flex and Fidelity Mid-cap

Can any of the company-specific risk be diversified away by investing in both Fidelity Flex 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 Flex 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 Flex Small and Fidelity Mid Cap Stock, you can compare the effects of market volatilities on Fidelity Flex 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 Flex with a short position of Fidelity Mid-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Flex and Fidelity Mid-cap.

Diversification Opportunities for Fidelity Flex and Fidelity Mid-cap

0.98

Correlation Coefficient

Fidelity Flex  Fidelity Mid-cap

Almost no diversification

The 3 months correlation between Fidelity and Fidelity is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Flex Small 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 Flex 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 Flex Small 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 Flex i.e., Fidelity Flex and Fidelity Mid-cap go up and down completely randomly.

Pair Corralation between Fidelity Flex and Fidelity Mid-cap

Assuming the 90 days horizon Fidelity Flex Small is expected to under-perform the Fidelity Mid-cap. In addition to that, Fidelity Flex is 1.05 times more volatile than Fidelity Mid Cap Stock. It trades about -0.12 of its total potential returns per unit of risk. Fidelity Mid Cap Stock is currently generating about -0.08 per unit of volatility. If you would invest  4,241  in Fidelity Mid Cap Stock on December 30, 2024 and sell it today you would lose (258.00) from holding Fidelity Mid Cap Stock or give up 6.08% of portfolio value over 90 days.

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

Fidelity Flex Small  vs.  Fidelity Mid Cap Stock

Fidelity Flex Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Flex Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Fidelity Mid Cap

Risk-Adjusted Performance

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 Flex and Fidelity Mid-cap

The main advantage of trading using opposite Fidelity Flex and Fidelity Mid-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Flex 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 Flex Small 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.