Correlation Between Perkins Mid and Fidelity Mid

Can any of the company-specific risk be diversified away by investing in both Perkins Mid and Fidelity Mid 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 Perkins Mid and Fidelity Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Perkins Mid Cap and Fidelity Mid Cap, you can compare the effects of market volatilities on Perkins Mid and Fidelity Mid 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 Perkins Mid with a short position of Fidelity Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perkins Mid and Fidelity Mid.

Diversification Opportunities for Perkins Mid and Fidelity Mid

0.95

Correlation Coefficient

Perkins Mid  Fidelity Mid

Almost no diversification

The 3 months correlation between Perkins and Fidelity is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Perkins Mid Cap and Fidelity Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Mid Cap and Perkins Mid 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 Perkins Mid Cap are associated (or correlated) with Fidelity Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Mid Cap has no effect on the direction of Perkins Mid i.e., Perkins Mid and Fidelity Mid go up and down completely randomly.

Pair Corralation between Perkins Mid and Fidelity Mid

Assuming the 90 days horizon Perkins Mid Cap is expected to generate 0.8 times more return on investment than Fidelity Mid. However, Perkins Mid Cap is 1.25 times less risky than Fidelity Mid. It trades about -0.25 of its potential returns per unit of risk. Fidelity Mid Cap is currently generating about -0.21 per unit of risk. If you would invest  1,636  in Perkins Mid Cap on February 3, 2024 and sell it today you would lose (67.00) from holding Perkins Mid Cap or give up 4.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Perkins Mid Cap  vs.  Fidelity Mid Cap

Perkins Mid Cap

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Perkins Mid Cap are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Perkins Mid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Mid Cap

Risk-Adjusted Performance

9 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Mid Cap are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity Mid may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Perkins Mid and Fidelity Mid

The main advantage of trading using opposite Perkins Mid and Fidelity Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perkins Mid position performs unexpectedly, Fidelity Mid 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 Mid will offset losses from the drop in Fidelity Mid's long position.

The idea behind Perkins Mid Cap and Fidelity Mid 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.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.