diversifiable risk of combining Fidelity Small and Oppenheimer Main 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 Oppenheimer Main Street, you can compare the effects of market volatilities on Fidelity Small and Oppenheimer Main 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 Oppenheimer Main. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Small and Oppenheimer Main.
Diversification Opportunities for Fidelity Small and Oppenheimer Main
Pair Corralation between Fidelity Small and Oppenheimer Main
Assuming the 90 days horizon Fidelity Small Cap is expected to generate 1.2 times more return on investment than Oppenheimer Main. However, Fidelity Small is 1.2 times more volatile than Oppenheimer Main Street. It trades about 0.04 of its potential returns per unit of risk. Oppenheimer Main Street is currently generating about 0.04 per unit of risk. If you would invest 2,443 in Fidelity Small Cap on November 24, 2023 and sell it today you would earn a total of 25.00 from holding Fidelity Small Cap or generate 1.02% return on investment over 90 days.
FIDELITY SMALL CAP vs. Oppenheimer Main Street
Fidelity Small and Oppenheimer Main Volatility Contrast
Pair Trading with Fidelity Small and Oppenheimer MainThe main advantage of trading using opposite Fidelity Small and Oppenheimer Main positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Small position performs unexpectedly, Oppenheimer Main 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 Oppenheimer Main will offset losses from the drop in Oppenheimer Main's long position. The idea behind Fidelity Small Cap and Oppenheimer Main Street 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.
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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