Correlation Between Large-cap Growth and Fidelity Series

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

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

Diversification Opportunities for Large-cap Growth and Fidelity Series

-0.2

Correlation Coefficient

Large-cap Growth  Fidelity Series

Good diversification

The 3 months correlation between LARGE-CAP and Fidelity is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Growth Profund and Fidelity Series Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Series Gove and Large-cap Growth 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 Large Cap Growth Profund are associated (or correlated) with Fidelity Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Series Gove has no effect on the direction of Large-cap Growth i.e., Large-cap Growth and Fidelity Series go up and down completely randomly.

Pair Corralation between Large-cap Growth and Fidelity Series

Assuming the 90 days horizon Large Cap Growth Profund is expected to generate 4.46 times more return on investment than Fidelity Series. However, Large-cap Growth is 4.46 times more volatile than Fidelity Series Government. It trades about 0.07 of its potential returns per unit of risk. Fidelity Series Government is currently generating about 0.02 per unit of risk. If you would invest  4,715  in Large Cap Growth Profund on October 26, 2024 and sell it today you would earn a total of  68.00  from holding Large Cap Growth Profund or generate 1.44% return on investment over 90 days.

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

Large Cap Growth Profund  vs.  Fidelity Series Government

Large Cap Growth

Risk-Adjusted Performance

10 of 100

OK

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

Fidelity Series Gove

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Series Government has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Fidelity Series is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Large-cap Growth and Fidelity Series

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

The idea behind Large Cap Growth Profund and Fidelity Series Government 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.