Correlation Between Fidelity Small and Ab Select

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

By analyzing existing cross correlation between Fidelity Small Cap and Ab Select Longshort, you can compare the effects of market volatilities on Fidelity Small and Ab Select 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 Small with a short position of Ab Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Small and Ab Select.

Diversification Opportunities for Fidelity Small and Ab Select

0.62

Correlation Coefficient

Fidelity Small  Ab Select

Poor diversification

The 3 months correlation between Fidelity and ASRLX is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Small Cap and Ab Select Longshort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Select Longshort and Fidelity Small 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 Small Cap are associated (or correlated) with Ab Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Select Longshort has no effect on the direction of Fidelity Small i.e., Fidelity Small and Ab Select go up and down completely randomly.

Pair Corralation between Fidelity Small and Ab Select

If you would invest  2,502  in Fidelity Small Cap on September 12, 2024 and sell it today you would earn a total of  263.00  from holding Fidelity Small Cap or generate 10.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

Fidelity Small Cap  vs.  Ab Select Longshort

Fidelity Small Cap

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Small Cap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ab Select Longshort

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ab Select Longshort has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Ab Select 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 Small and Ab Select

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

The idea behind Fidelity Small Cap and Ab Select Longshort 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.