Correlation Between Fidelity Small and Dreyfus Select

Can any of the company-specific risk be diversified away by investing in both Fidelity Small and Dreyfus 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 Dreyfus 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 Dreyfus Select Managers, you can compare the effects of market volatilities on Fidelity Small and Dreyfus 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 Dreyfus Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Small and Dreyfus Select.

Diversification Opportunities for Fidelity Small and Dreyfus Select

0.64

Correlation Coefficient

Fidelity Small  Dreyfus Select

Poor diversification

The 3 months correlation between Fidelity and Dreyfus is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Small Cap and Dreyfus Select Managers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Select Managers 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 Dreyfus Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Select Managers has no effect on the direction of Fidelity Small i.e., Fidelity Small and Dreyfus Select go up and down completely randomly.

Pair Corralation between Fidelity Small and Dreyfus Select

Assuming the 90 days horizon Fidelity Small Cap is expected to generate 1.3 times more return on investment than Dreyfus Select. However, Fidelity Small is 1.3 times more volatile than Dreyfus Select Managers. It trades about 0.07 of its potential returns per unit of risk. Dreyfus Select Managers is currently generating about 0.07 per unit of risk. If you would invest  2,275  in Fidelity Small Cap on September 12, 2024 and sell it today you would earn a total of  717.00  from holding Fidelity Small Cap or generate 31.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	73.03%
Values	Daily Returns

Fidelity Small Cap  vs.  Dreyfus Select Managers

Fidelity Small Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Small Cap are ranked lower than 12 (%) 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.

Dreyfus Select Managers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dreyfus Select Managers has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Dreyfus 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 Dreyfus Select

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

The idea behind Fidelity Small Cap and Dreyfus Select Managers 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.