Correlation Between Nationwide Mellon and Fidelity Small

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

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

Diversification Opportunities for Nationwide Mellon and Fidelity Small

0.62

Correlation Coefficient

Nationwide Mellon  Fidelity Small

Poor diversification

The 3 months correlation between Nationwide and Fidelity is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Mellon Disciplined 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 Nationwide Mellon 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 Nationwide Mellon Disciplined 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 Nationwide Mellon i.e., Nationwide Mellon and Fidelity Small go up and down completely randomly.

Pair Corralation between Nationwide Mellon and Fidelity Small

Assuming the 90 days horizon Nationwide Mellon is expected to generate 3.41 times less return on investment than Fidelity Small. But when comparing it to its historical volatility, Nationwide Mellon Disciplined is 1.37 times less risky than Fidelity Small. It trades about 0.01 of its potential returns per unit of risk. Fidelity Small Cap is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,128  in Fidelity Small Cap on September 29, 2024 and sell it today you would earn a total of  434.00  from holding Fidelity Small Cap or generate 20.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Nationwide Mellon Disciplined  vs.  Fidelity Small Cap

Nationwide Mellon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nationwide Mellon Disciplined 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 primary indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Fidelity Small Cap

Risk-Adjusted Performance

0 of 100

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 fairly strong basic indicators, Fidelity Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nationwide Mellon and Fidelity Small

The main advantage of trading using opposite Nationwide Mellon and Fidelity Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Mellon 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 Nationwide Mellon Disciplined 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.