Correlation Between Sp Smallcap and Fidelity Series

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

By analyzing existing cross correlation between Sp Smallcap 600 and Fidelity Series 0 5, you can compare the effects of market volatilities on Sp Smallcap 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 Sp Smallcap with a short position of Fidelity Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sp Smallcap and Fidelity Series.

Diversification Opportunities for Sp Smallcap and Fidelity Series

0.44

Correlation Coefficient

Sp Smallcap  Fidelity Series

Very weak diversification

The 3 months correlation between RYSVX and Fidelity is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sp Smallcap 600 and Fidelity Series 0 5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Series 0 and Sp Smallcap 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 Sp Smallcap 600 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 0 has no effect on the direction of Sp Smallcap i.e., Sp Smallcap and Fidelity Series go up and down completely randomly.

Pair Corralation between Sp Smallcap and Fidelity Series

Assuming the 90 days horizon Sp Smallcap 600 is expected to generate 13.63 times more return on investment than Fidelity Series. However, Sp Smallcap is 13.63 times more volatile than Fidelity Series 0 5. It trades about 0.08 of its potential returns per unit of risk. Fidelity Series 0 5 is currently generating about 0.12 per unit of risk. If you would invest  19,935  in Sp Smallcap 600 on October 24, 2024 and sell it today you would earn a total of  1,333  from holding Sp Smallcap 600 or generate 6.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Sp Smallcap 600  vs.  Fidelity Series 0 5

Sp Smallcap 600

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sp Smallcap 600 are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Sp Smallcap may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Fidelity Series 0

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Series 0 5 are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic 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 Sp Smallcap and Fidelity Series

The main advantage of trading using opposite Sp Smallcap and Fidelity Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sp Smallcap 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 Sp Smallcap 600 and Fidelity Series 0 5 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.