Correlation Between Fidelity Contrafund and Largecap Growth
Can any of the company-specific risk be diversified away by investing in both Fidelity Contrafund and Largecap Growth 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 Largecap Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Contrafund and Largecap Growth Fund, you can compare the effects of market volatilities on Fidelity Contrafund and Largecap Growth 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 Largecap Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Contrafund and Largecap Growth.
Diversification Opportunities for Fidelity Contrafund and Largecap Growth
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and Largecap is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Contrafund and Largecap Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Largecap Growth 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 Largecap Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Largecap Growth has no effect on the direction of Fidelity Contrafund i.e., Fidelity Contrafund and Largecap Growth go up and down completely randomly.
Pair Corralation between Fidelity Contrafund and Largecap Growth
Assuming the 90 days horizon Fidelity Contrafund is expected to generate 0.92 times more return on investment than Largecap Growth. However, Fidelity Contrafund is 1.09 times less risky than Largecap Growth. It trades about 0.14 of its potential returns per unit of risk. Largecap Growth Fund is currently generating about 0.11 per unit of risk. If you would invest 1,407 in Fidelity Contrafund on January 25, 2024 and sell it today you would earn a total of 449.00 from holding Fidelity Contrafund or generate 31.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Contrafund vs. Largecap Growth Fund
Performance |
| Timeline |
| Fidelity Contrafund |
| Largecap Growth |
Fidelity Contrafund and Largecap Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Contrafund and Largecap Growth
The main advantage of trading using opposite Fidelity Contrafund and Largecap Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Contrafund position performs unexpectedly, Largecap Growth 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 Largecap Growth will offset losses from the drop in Largecap Growth's long position.| Fidelity Contrafund vs. Fidelity Low Priced Stock | Fidelity Contrafund vs. Fidelity Growth Pany | Fidelity Contrafund vs. Fidelity Magellan Fund | Fidelity Contrafund vs. Fidelity Diversified International |
| Largecap Growth vs. Pace Smallmedium Value | Largecap Growth vs. Rbb Fund | Largecap Growth vs. Old Westbury Small | Largecap Growth vs. Guidemark Smallmid Cap |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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