Correlation Between Fidelity Sai and Large Cap

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

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

Diversification Opportunities for Fidelity Sai and Large Cap

-0.48

Correlation Coefficient

Fidelity Sai  Large Cap

Very good diversification

The 3 months correlation between Fidelity and Large is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Sai Convertible and Large Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap Value and Fidelity Sai 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 Sai Convertible are associated (or correlated) with Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap Value has no effect on the direction of Fidelity Sai i.e., Fidelity Sai and Large Cap go up and down completely randomly.

Pair Corralation between Fidelity Sai and Large Cap

Assuming the 90 days horizon Fidelity Sai Convertible is expected to generate 0.1 times more return on investment than Large Cap. However, Fidelity Sai Convertible is 10.13 times less risky than Large Cap. It trades about 0.55 of its potential returns per unit of risk. Large Cap Value is currently generating about -0.02 per unit of risk. If you would invest  1,033  in Fidelity Sai Convertible on December 29, 2024 and sell it today you would earn a total of  35.00  from holding Fidelity Sai Convertible or generate 3.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Fidelity Sai Convertible  vs.  Large Cap Value

Fidelity Sai Convertible

Risk-Adjusted Performance

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Sai Convertible are ranked lower than 43 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Sai is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Large Cap Value

Risk-Adjusted Performance

Very Weak

Over the last 90 days Large Cap Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Large 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 Sai and Large Cap

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

The idea behind Fidelity Sai Convertible and Large Cap Value 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.