Correlation Between Large Cap and Fidelity Sai

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

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

Diversification Opportunities for Large Cap and Fidelity Sai

0.1

Correlation Coefficient

Large Cap  Fidelity Sai

Average diversification

The 3 months correlation between Large and Fidelity is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Value and Fidelity Sai Convertible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Sai Convertible and Large Cap 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 Value are associated (or correlated) with Fidelity Sai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Sai Convertible has no effect on the direction of Large Cap i.e., Large Cap and Fidelity Sai go up and down completely randomly.

Pair Corralation between Large Cap and Fidelity Sai

Assuming the 90 days horizon Large Cap Value is expected to under-perform the Fidelity Sai. In addition to that, Large Cap is 25.99 times more volatile than Fidelity Sai Convertible. It trades about -0.09 of its total potential returns per unit of risk. Fidelity Sai Convertible is currently generating about 0.37 per unit of volatility. If you would invest  1,072  in Fidelity Sai Convertible on September 13, 2024 and sell it today you would earn a total of  26.00  from holding Fidelity Sai Convertible or generate 2.43% return on investment over 90 days.

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

Large Cap Value  vs.  Fidelity Sai Convertible

Large Cap Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Large Cap Value 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 January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Fidelity Sai Convertible

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Sai Convertible are ranked lower than 29 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Sai 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 and Fidelity Sai

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

The idea behind Large Cap Value and Fidelity Sai Convertible 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.