Correlation Between Amcap Fund and Fidelity Trafund
Can any of the company-specific risk be diversified away by investing in both Amcap Fund and Fidelity Trafund 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 Amcap Fund and Fidelity Trafund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amcap Fund Class and Fidelity Trafund Class, you can compare the effects of market volatilities on Amcap Fund and Fidelity Trafund 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 Amcap Fund with a short position of Fidelity Trafund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amcap Fund and Fidelity Trafund.
Diversification Opportunities for Amcap Fund and Fidelity Trafund
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Amcap and Fidelity is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Amcap Fund Class and Fidelity Trafund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Trafund Class and Amcap Fund 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 Amcap Fund Class are associated (or correlated) with Fidelity Trafund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Trafund Class has no effect on the direction of Amcap Fund i.e., Amcap Fund and Fidelity Trafund go up and down completely randomly.
Pair Corralation between Amcap Fund and Fidelity Trafund
Assuming the 90 days horizon Amcap Fund Class is expected to under-perform the Fidelity Trafund. In addition to that, Amcap Fund is 1.11 times more volatile than Fidelity Trafund Class. It trades about -0.26 of its total potential returns per unit of risk. Fidelity Trafund Class is currently generating about -0.19 per unit of volatility. If you would invest 1,910 in Fidelity Trafund Class on January 20, 2024 and sell it today you would lose (57.00) from holding Fidelity Trafund Class or give up 2.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amcap Fund Class vs. Fidelity Trafund Class
Performance |
| Timeline |
| Amcap Fund Class |
| Fidelity Trafund Class |
Amcap Fund and Fidelity Trafund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amcap Fund and Fidelity Trafund
The main advantage of trading using opposite Amcap Fund and Fidelity Trafund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amcap Fund position performs unexpectedly, Fidelity Trafund 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 Trafund will offset losses from the drop in Fidelity Trafund's long position.The idea behind Amcap Fund Class and Fidelity Trafund Class 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.| Fidelity Trafund vs. Fidelity Advisor International | Fidelity Trafund vs. Lord Abbett Growth | Fidelity Trafund vs. Delaware Smid Cap | Fidelity Trafund vs. Fidelity Advisor Series |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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