Correlation Between Victory Rs and Fidelity Contrafund

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

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

Diversification Opportunities for Victory Rs and Fidelity Contrafund

0.87

Correlation Coefficient

Victory Rs  Fidelity Contrafund

Very poor diversification

The 3 months correlation between Victory and Fidelity is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Victory Rs Small and Fidelity Contrafund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Contrafund and Victory Rs 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 Victory Rs Small are associated (or correlated) with Fidelity Contrafund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Contrafund has no effect on the direction of Victory Rs i.e., Victory Rs and Fidelity Contrafund go up and down completely randomly.

Pair Corralation between Victory Rs and Fidelity Contrafund

Assuming the 90 days horizon Victory Rs Small is expected to under-perform the Fidelity Contrafund. In addition to that, Victory Rs is 1.15 times more volatile than Fidelity Contrafund. It trades about -0.26 of its total potential returns per unit of risk. Fidelity Contrafund is currently generating about -0.15 per unit of volatility. If you would invest  2,181  in Fidelity Contrafund on October 6, 2024 and sell it today you would lose (66.00) from holding Fidelity Contrafund or give up 3.03% of portfolio value over 90 days.

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

Victory Rs Small  vs.  Fidelity Contrafund

Victory Rs Small

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Rs Small are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Victory Rs may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Fidelity Contrafund

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Contrafund are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Contrafund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Victory Rs and Fidelity Contrafund

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

The idea behind Victory Rs Small and Fidelity Contrafund 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..