Correlation Between Westwood Largecap and Fidelity Trend
Can any of the company-specific risk be diversified away by investing in both Westwood Largecap and Fidelity Trend 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 Westwood Largecap and Fidelity Trend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westwood Largecap Value and Fidelity Trend Fund, you can compare the effects of market volatilities on Westwood Largecap and Fidelity Trend 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 Westwood Largecap with a short position of Fidelity Trend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westwood Largecap and Fidelity Trend.
Diversification Opportunities for Westwood Largecap and Fidelity Trend
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Westwood and Fidelity is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Westwood Largecap Value and Fidelity Trend Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Trend and Westwood Largecap 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 Westwood Largecap Value are associated (or correlated) with Fidelity Trend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Trend has no effect on the direction of Westwood Largecap i.e., Westwood Largecap and Fidelity Trend go up and down completely randomly.
Pair Corralation between Westwood Largecap and Fidelity Trend
Assuming the 90 days horizon Westwood Largecap Value is expected to under-perform the Fidelity Trend. But the mutual fund apears to be less risky and, when comparing its historical volatility, Westwood Largecap Value is 1.16 times less risky than Fidelity Trend. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Fidelity Trend Fund is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 18,455 in Fidelity Trend Fund on September 15, 2024 and sell it today you would earn a total of 3,280 from holding Fidelity Trend Fund or generate 17.77% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Westwood Largecap Value vs. Fidelity Trend Fund
Performance |
Timeline |
Westwood Largecap Value |
Fidelity Trend |
Westwood Largecap and Fidelity Trend Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Westwood Largecap and Fidelity Trend
The main advantage of trading using opposite Westwood Largecap and Fidelity Trend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westwood Largecap position performs unexpectedly, Fidelity Trend 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 Trend will offset losses from the drop in Fidelity Trend's long position.Westwood Largecap vs. Western Asset Municipal | Westwood Largecap vs. Fa 529 Aggressive | Westwood Largecap vs. Arrow Managed Futures | Westwood Largecap vs. Aam Select Income |
Fidelity Trend vs. Fidelity Stock Selector | Fidelity Trend vs. Fidelity Focused Stock | Fidelity Trend vs. Fidelity Disciplined Equity | Fidelity Trend vs. Fidelity Stock Selector |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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