Correlation Between Fidelity Focused and Nicholas

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

By analyzing existing cross correlation between Fidelity Focused High and Nicholas Ii Inc, you can compare the effects of market volatilities on Fidelity Focused and Nicholas 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 Focused with a short position of Nicholas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Focused and Nicholas.

Diversification Opportunities for Fidelity Focused and Nicholas

0.46

Correlation Coefficient

Fidelity Focused  Nicholas

Very weak diversification

The 3 months correlation between Fidelity and Nicholas is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Focused High and Nicholas Ii Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicholas Ii and Fidelity Focused 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 Focused High are associated (or correlated) with Nicholas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nicholas Ii has no effect on the direction of Fidelity Focused i.e., Fidelity Focused and Nicholas go up and down completely randomly.

Pair Corralation between Fidelity Focused and Nicholas

Assuming the 90 days horizon Fidelity Focused is expected to generate 48.4 times less return on investment than Nicholas. But when comparing it to its historical volatility, Fidelity Focused High is 5.43 times less risky than Nicholas. It trades about 0.01 of its potential returns per unit of risk. Nicholas Ii Inc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  3,464  in Nicholas Ii Inc on September 17, 2024 and sell it today you would earn a total of  214.00  from holding Nicholas Ii Inc or generate 6.18% return on investment over 90 days.

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

Fidelity Focused High  vs.  Nicholas Ii Inc

Fidelity Focused High

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Focused High are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Fidelity Focused is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nicholas Ii

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nicholas Ii Inc are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nicholas 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 Focused and Nicholas

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

The idea behind Fidelity Focused High and Nicholas Ii Inc 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.