Correlation Between Growth Fund and Fidelity Contrafund
Can any of the company-specific risk be diversified away by investing in both Growth Fund and Fidelity Contrafund 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 Growth Fund and Fidelity Contrafund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Growth Fund Of and Fidelity Contrafund, you can compare the effects of market volatilities on Growth Fund and Fidelity Contrafund 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 Growth Fund with a short position of Fidelity Contrafund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Growth Fund and Fidelity Contrafund.
Diversification Opportunities for Growth Fund and Fidelity Contrafund
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Growth and Fidelity is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Growth Fund Of and Fidelity Contrafund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Contrafund and Growth 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 Growth Fund Of are associated (or correlated) with Fidelity Contrafund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Contrafund has no effect on the direction of Growth Fund i.e., Growth Fund and Fidelity Contrafund go up and down completely randomly.
Pair Corralation between Growth Fund and Fidelity Contrafund
Assuming the 90 days horizon Growth Fund is expected to generate 1.08 times less return on investment than Fidelity Contrafund. But when comparing it to its historical volatility, Growth Fund Of is 1.02 times less risky than Fidelity Contrafund. It trades about 0.11 of its potential returns per unit of risk. Fidelity Contrafund is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,779 in Fidelity Contrafund on February 13, 2024 and sell it today you would earn a total of 124.00 from holding Fidelity Contrafund or generate 6.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Growth Fund Of vs. Fidelity Contrafund
Performance |
| Timeline |
| Growth Fund |
| Fidelity Contrafund |
Growth Fund and Fidelity Contrafund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Growth Fund and Fidelity Contrafund
The main advantage of trading using opposite Growth Fund and Fidelity Contrafund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Growth Fund position performs unexpectedly, Fidelity Contrafund 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 Contrafund will offset losses from the drop in Fidelity Contrafund's long position.| Growth Fund vs. American Funds The | Growth Fund vs. American Funds The | Growth Fund vs. Growth Fund Of | Growth Fund vs. Growth Fund Of |
| Fidelity Contrafund vs. T Rowe Price | Fidelity Contrafund vs. T Rowe Price | Fidelity Contrafund vs. T Rowe Price | Fidelity Contrafund vs. T Rowe Price |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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