Correlation Between Fidelity Small and Fidelity Blue

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

Diversification Opportunities for Fidelity Small and Fidelity Blue

0.9

Correlation Coefficient

Fidelity Small  Fidelity Blue

Almost no diversification

The 3 months correlation between Fidelity and Fidelity is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Small Mid Factor 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 Small 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 Small Mid Factor 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 Small i.e., Fidelity Small and Fidelity Blue go up and down completely randomly.

Pair Corralation between Fidelity Small and Fidelity Blue

Given the investment horizon of 90 days Fidelity Small Mid Factor is expected to generate 1.47 times more return on investment than Fidelity Blue. However, Fidelity Small is 1.47 times more volatile than Fidelity Blue Chip. It trades about 0.06 of its potential returns per unit of risk. Fidelity Blue Chip is currently generating about 0.05 per unit of risk. If you would invest  3,342  in Fidelity Small Mid Factor on October 25, 2024 and sell it today you would earn a total of  964.00  from holding Fidelity Small Mid Factor or generate 28.85% return on investment over 90 days.

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

Fidelity Small Mid Factor  vs.  Fidelity Blue Chip

Fidelity Small Mid

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Small Mid Factor are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, Fidelity Small is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Fidelity Blue Chip

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Blue Chip are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental indicators, Fidelity Blue is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Fidelity Small and Fidelity Blue

The main advantage of trading using opposite Fidelity Small and Fidelity Blue positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Small 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 Small Mid Factor 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.