Correlation Between Fidelity Capital and Zevenbergen Genea

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

By analyzing existing cross correlation between Fidelity Capital Income and Zevenbergen Genea Fund, you can compare the effects of market volatilities on Fidelity Capital and Zevenbergen Genea 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 Capital with a short position of Zevenbergen Genea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Capital and Zevenbergen Genea.

Diversification Opportunities for Fidelity Capital and Zevenbergen Genea

0.68

Correlation Coefficient

Fidelity Capital  Zevenbergen Genea

Poor diversification

The 3 months correlation between Fidelity and Zevenbergen is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Capital Income and Zevenbergen Genea Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zevenbergen Genea and Fidelity Capital 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 Capital Income are associated (or correlated) with Zevenbergen Genea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zevenbergen Genea has no effect on the direction of Fidelity Capital i.e., Fidelity Capital and Zevenbergen Genea go up and down completely randomly.

Pair Corralation between Fidelity Capital and Zevenbergen Genea

Assuming the 90 days horizon Fidelity Capital is expected to generate 5.41 times less return on investment than Zevenbergen Genea. But when comparing it to its historical volatility, Fidelity Capital Income is 5.85 times less risky than Zevenbergen Genea. It trades about 0.34 of its potential returns per unit of risk. Zevenbergen Genea Fund is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  4,084  in Zevenbergen Genea Fund on September 12, 2024 and sell it today you would earn a total of  1,245  from holding Zevenbergen Genea Fund or generate 30.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Fidelity Capital Income  vs.  Zevenbergen Genea Fund

Fidelity Capital Income

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Capital Income are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Fidelity Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Zevenbergen Genea

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Zevenbergen Genea Fund are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly fragile basic indicators, Zevenbergen Genea showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidelity Capital and Zevenbergen Genea

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

The idea behind Fidelity Capital Income and Zevenbergen Genea Fund 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.