Correlation Between Fidelity Contrafund and Mainstay Large
Can any of the company-specific risk be diversified away by investing in both Fidelity Contrafund and Mainstay Large 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 Contrafund and Mainstay Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Contrafund and Mainstay Large Cap, you can compare the effects of market volatilities on Fidelity Contrafund and Mainstay Large 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 Contrafund with a short position of Mainstay Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Contrafund and Mainstay Large.
Diversification Opportunities for Fidelity Contrafund and Mainstay Large
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Mainstay is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Contrafund and Mainstay Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Large Cap and Fidelity Contrafund 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 Contrafund are associated (or correlated) with Mainstay Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Large Cap has no effect on the direction of Fidelity Contrafund i.e., Fidelity Contrafund and Mainstay Large go up and down completely randomly.
Pair Corralation between Fidelity Contrafund and Mainstay Large
Assuming the 90 days horizon Fidelity Contrafund is expected to generate 0.83 times more return on investment than Mainstay Large. However, Fidelity Contrafund is 1.21 times less risky than Mainstay Large. It trades about -0.04 of its potential returns per unit of risk. Mainstay Large Cap is currently generating about -0.07 per unit of risk. If you would invest 1,873 in Fidelity Contrafund on January 17, 2024 and sell it today you would lose (14.00) from holding Fidelity Contrafund or give up 0.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Contrafund vs. Mainstay Large Cap
Performance |
| Timeline |
| Fidelity Contrafund |
| Mainstay Large Cap |
Fidelity Contrafund and Mainstay Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Contrafund and Mainstay Large
The main advantage of trading using opposite Fidelity Contrafund and Mainstay Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Contrafund position performs unexpectedly, Mainstay Large 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 Mainstay Large will offset losses from the drop in Mainstay Large's long position.The idea behind Fidelity Contrafund and Mainstay Large Cap 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.
| Mainstay Large vs. Mainstay Tax Free | Mainstay Large vs. Mainstay Mackay High | Mainstay Large vs. Mainstay Moderate Allocation | Mainstay Large vs. Mainstay Mackay New |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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