Correlation Between Dimensional 2025 and Fidelity Large

Can any of the company-specific risk be diversified away by investing in both Dimensional 2025 and Fidelity 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 Dimensional 2025 and Fidelity Large into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dimensional 2025 Target and Fidelity Large Cap, you can compare the effects of market volatilities on Dimensional 2025 and Fidelity 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 Dimensional 2025 with a short position of Fidelity Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional 2025 and Fidelity Large.

Diversification Opportunities for Dimensional 2025 and Fidelity Large

0.68

Correlation Coefficient

Dimensional 2025  Fidelity Large

Poor diversification

The 3 months correlation between Dimensional and Fidelity is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional 2025 Target and Fidelity Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Large Cap and Dimensional 2025 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 Dimensional 2025 Target are associated (or correlated) with Fidelity Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Large Cap has no effect on the direction of Dimensional 2025 i.e., Dimensional 2025 and Fidelity Large go up and down completely randomly.

Pair Corralation between Dimensional 2025 and Fidelity Large

Assuming the 90 days horizon Dimensional 2025 Target is expected to under-perform the Fidelity Large. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dimensional 2025 Target is 3.04 times less risky than Fidelity Large. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Fidelity Large Cap is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,507  in Fidelity Large Cap on January 28, 2025 and sell it today you would lose (14.00) from holding Fidelity Large Cap or give up 0.93% of portfolio value over 90 days.

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

Dimensional 2025 Target  vs.  Fidelity Large Cap

Dimensional 2025 Target

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dimensional 2025 Target has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Dimensional 2025 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Dimensional 2025 and Fidelity Large

The main advantage of trading using opposite Dimensional 2025 and Fidelity Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional 2025 position performs unexpectedly, Fidelity 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 Fidelity Large will offset losses from the drop in Fidelity Large's long position.

The idea behind Dimensional 2025 Target and Fidelity 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.

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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.