Correlation Between Hartford Small and Fidelity Small

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

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

Diversification Opportunities for Hartford Small and Fidelity Small

0.99

Correlation Coefficient

Hartford Small  Fidelity Small

No risk reduction

The 3 months correlation between Hartford and Fidelity is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Small Cap and Fidelity Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Small Cap and Hartford 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 Hartford Small Cap are associated (or correlated) with Fidelity Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Small Cap has no effect on the direction of Hartford Small i.e., Hartford Small and Fidelity Small go up and down completely randomly.

Pair Corralation between Hartford Small and Fidelity Small

Assuming the 90 days horizon Hartford Small Cap is expected to under-perform the Fidelity Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Hartford Small Cap is 1.05 times less risky than Fidelity Small. The mutual fund trades about -0.14 of its potential returns per unit of risk. The Fidelity Small Cap is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  3,383  in Fidelity Small Cap on December 31, 2024 and sell it today you would lose (359.00) from holding Fidelity Small Cap or give up 10.61% of portfolio value over 90 days.

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

Hartford Small Cap  vs.  Fidelity Small Cap

Hartford Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hartford Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Fidelity Small Cap

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Hartford Small and Fidelity Small

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

The idea behind Hartford Small Cap and Fidelity Small Cap 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.