Correlation Between Fidelity Growth and Fidelity Equity-income

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

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

Diversification Opportunities for Fidelity Growth and Fidelity Equity-income

0.88

Correlation Coefficient

Fidelity Growth  Fidelity Equity-income

Very poor diversification

The 3 months correlation between Fidelity and Fidelity is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Growth Pany and Fidelity Equity Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Equity Income and Fidelity Growth 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 Growth Pany are associated (or correlated) with Fidelity Equity-income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Equity Income has no effect on the direction of Fidelity Growth i.e., Fidelity Growth and Fidelity Equity-income go up and down completely randomly.

Pair Corralation between Fidelity Growth and Fidelity Equity-income

Assuming the 90 days horizon Fidelity Growth Pany is expected to generate 1.74 times more return on investment than Fidelity Equity-income. However, Fidelity Growth is 1.74 times more volatile than Fidelity Equity Income Fund. It trades about 0.19 of its potential returns per unit of risk. Fidelity Equity Income Fund is currently generating about 0.16 per unit of risk. If you would invest  3,853  in Fidelity Growth Pany on September 2, 2024 and sell it today you would earn a total of  491.00  from holding Fidelity Growth Pany or generate 12.74% return on investment over 90 days.

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

Fidelity Growth Pany  vs.  Fidelity Equity Income Fund

Fidelity Growth Pany

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Growth Pany are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fidelity Equity Income

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Equity Income Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Fidelity Equity-income 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 Growth and Fidelity Equity-income

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

The idea behind Fidelity Growth Pany and Fidelity Equity Income 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.