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Pair CorrelationComparison
Can any of the company-specific risk be diversified away by investing in both Fidelity Contrafund and Fidelity Growth 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 Fidelity Contrafund and Fidelity Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Contrafund and Fidelity Growth Pany, you can compare the effects of market volatilities on Fidelity Contrafund and Fidelity Growth 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 Fidelity Contrafund with a short position of Fidelity Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Contrafund and Fidelity Growth.
Diversification Opportunities for Fidelity Contrafund and Fidelity Growth
0.91 | Correlation Coefficient | Fidelity Contrafund Fidelity Growth |
Almost no diversification
The 3 months correlation between Fidelity and Fidelity is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Contrafund and Fidelity Growth Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Growth Pany and Fidelity Contrafund 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 Fidelity Contrafund are associated (or correlated) with Fidelity Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Growth Pany has no effect on the direction of Fidelity Contrafund i.e., Fidelity Contrafund and Fidelity Growth go up and down completely randomly.
Compare DividendsOptimize
Pair Corralation between Fidelity Contrafund and Fidelity Growth
Assuming the 90 days horizon Fidelity Contrafund is expected to generate 0.74 times more return on investment than Fidelity Growth. However, Fidelity Contrafund is 1.35 times less risky than Fidelity Growth. It trades about 0.03 of its potential returns per unit of risk. Fidelity Growth Pany is currently generating about 0.02 per unit of risk. If you would invest 2,039 in Fidelity Contrafund on June 16, 2024 and sell it today you would earn a total of 12.00 from holding Fidelity Contrafund or generate 0.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Contrafundvs.Fidelity Growth Pany
Performance
| Timeline |
| Fidelity Contrafund | Correlation | Profile |
Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Contrafund are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Contrafund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
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Performance | Backtest | Predict |
| Fidelity Growth Pany | Correlation | Profile |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Over the last 90 days Fidelity Growth Pany has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Fidelity Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
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Performance | Backtest | Predict |
Fidelity Contrafund and Fidelity Growth Volatility Contrast
Predicted Return Density
| Returns |
Pair Trading with Fidelity Contrafund and Fidelity Growth
The main advantage of trading using opposite Fidelity Contrafund and Fidelity Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Contrafund position performs unexpectedly, Fidelity Growth 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 Growth will offset losses from the drop in Fidelity Growth's long position.
| Fidelity Contrafund vs. Fidelity Low Priced Stock | Fidelity Contrafund vs. Fidelity Growth Pany | Fidelity Contrafund vs. Fidelity Magellan Fund | Fidelity Contrafund vs. Fidelity Diversified International |
The idea behind Fidelity Contrafund and Fidelity Growth Pany 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.
| Fidelity Growth vs. Fidelity Low Priced Stock | Fidelity Growth vs. Fidelity Contrafund | Fidelity Growth vs. Fidelity Diversified International | Fidelity Growth vs. Fidelity Blue Chip |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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