Correlation Between Fidelity Mid-cap and Fidelity Blue

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

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

Diversification Opportunities for Fidelity Mid-cap and Fidelity Blue

0.26

Correlation Coefficient

Fidelity Mid-cap  Fidelity Blue

Modest diversification

The 3 months correlation between Fidelity and Fidelity is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Mid Cap Stock and Fidelity Blue Chip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Blue Chip and Fidelity Mid-cap 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 Mid Cap Stock are associated (or correlated) with Fidelity Blue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Blue Chip has no effect on the direction of Fidelity Mid-cap i.e., Fidelity Mid-cap and Fidelity Blue go up and down completely randomly.

Pair Corralation between Fidelity Mid-cap and Fidelity Blue

Assuming the 90 days horizon Fidelity Mid Cap Stock is expected to under-perform the Fidelity Blue. But the mutual fund apears to be less risky and, when comparing its historical volatility, Fidelity Mid Cap Stock is 1.38 times less risky than Fidelity Blue. The mutual fund trades about -0.16 of its potential returns per unit of risk. The Fidelity Blue Chip is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  22,867  in Fidelity Blue Chip on December 2, 2024 and sell it today you would lose (795.00) from holding Fidelity Blue Chip or give up 3.48% of portfolio value over 90 days.

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

Fidelity Mid Cap Stock  vs.  Fidelity Blue Chip

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 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 Blue Chip

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Fidelity Mid Cap Stock and Fidelity Blue Chip 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.