Correlation Between Fidelity Capital and Fidelity Dividend

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

By analyzing existing cross correlation between Fidelity Capital Appreciation and Fidelity Dividend Growth, you can compare the effects of market volatilities on Fidelity Capital and Fidelity Dividend 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 Fidelity Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Capital and Fidelity Dividend.

Diversification Opportunities for Fidelity Capital and Fidelity Dividend

0.97

Correlation Coefficient

Fidelity Capital  Fidelity Dividend

Almost no diversification

The 3 months correlation between Fidelity and Fidelity is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Capital Appreciation and Fidelity Dividend Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Dividend Growth 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 Appreciation are associated (or correlated) with Fidelity Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Dividend Growth has no effect on the direction of Fidelity Capital i.e., Fidelity Capital and Fidelity Dividend go up and down completely randomly.

Pair Corralation between Fidelity Capital and Fidelity Dividend

Assuming the 90 days horizon Fidelity Capital is expected to generate 1.41 times less return on investment than Fidelity Dividend. But when comparing it to its historical volatility, Fidelity Capital Appreciation is 1.03 times less risky than Fidelity Dividend. It trades about 0.08 of its potential returns per unit of risk. Fidelity Dividend Growth is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,805  in Fidelity Dividend Growth on September 19, 2024 and sell it today you would earn a total of  200.00  from holding Fidelity Dividend Growth or generate 5.26% return on investment over 90 days.

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

Fidelity Capital Appreciation  vs.  Fidelity Dividend Growth

Fidelity Capital App

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Capital Appreciation are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Dividend Growth

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Dividend Growth are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Fidelity Dividend is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fidelity Capital and Fidelity Dividend

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

The idea behind Fidelity Capital Appreciation and Fidelity Dividend Growth 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.