Correlation Between Fidelity Small and Paradigm Micro-cap
Can any of the company-specific risk be diversified away by investing in both Fidelity Small and Paradigm Micro-cap 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 Paradigm Micro-cap 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 Paradigm Micro Cap Fund, you can compare the effects of market volatilities on Fidelity Small and Paradigm Micro-cap 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 Paradigm Micro-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Small and Paradigm Micro-cap.
Diversification Opportunities for Fidelity Small and Paradigm Micro-cap
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Paradigm is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Small Cap and Paradigm Micro Cap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paradigm Micro Cap 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 Paradigm Micro-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paradigm Micro Cap has no effect on the direction of Fidelity Small i.e., Fidelity Small and Paradigm Micro-cap go up and down completely randomly.
Pair Corralation between Fidelity Small and Paradigm Micro-cap
Assuming the 90 days horizon Fidelity Small Cap is expected to generate 0.92 times more return on investment than Paradigm Micro-cap. However, Fidelity Small Cap is 1.09 times less risky than Paradigm Micro-cap. It trades about -0.07 of its potential returns per unit of risk. Paradigm Micro Cap Fund is currently generating about -0.07 per unit of risk. If you would invest 2,572 in Fidelity Small Cap on February 7, 2024 and sell it today you would lose (46.00) from holding Fidelity Small Cap or give up 1.79% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Fidelity Small Cap vs. Paradigm Micro Cap Fund
Performance |
Timeline |
Fidelity Small Cap |
Paradigm Micro Cap |
Fidelity Small and Paradigm Micro-cap Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fidelity Small and Paradigm Micro-cap
The main advantage of trading using opposite Fidelity Small and Paradigm Micro-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Small position performs unexpectedly, Paradigm Micro-cap 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 Paradigm Micro-cap will offset losses from the drop in Paradigm Micro-cap's long position.Fidelity Small vs. Fidelity Mid Cap | Fidelity Small vs. Fidelity International Index | Fidelity Small vs. Fidelity Bond Index | Fidelity Small vs. Fidelity Large Cap |
Paradigm Micro-cap vs. Paradigm Select Fund | Paradigm Micro-cap vs. Needham Aggressive Growth | Paradigm Micro-cap vs. Ultramid Cap Profund Ultramid Cap | Paradigm Micro-cap vs. Towle Deep Value |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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