Correlation Between Fidelity Small and Harbor SMID

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

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

Diversification Opportunities for Fidelity Small and Harbor SMID

0.88

Correlation Coefficient

Fidelity Small  Harbor SMID

Very poor diversification

The 3 months correlation between Fidelity and Harbor is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Small Mid Cap and Harbor SMID Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor SMID Cap and Fidelity Small 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 Small Mid Cap are associated (or correlated) with Harbor SMID. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor SMID Cap has no effect on the direction of Fidelity Small i.e., Fidelity Small and Harbor SMID go up and down completely randomly.

Pair Corralation between Fidelity Small and Harbor SMID

Given the investment horizon of 90 days Fidelity Small is expected to generate 1.14 times less return on investment than Harbor SMID. But when comparing it to its historical volatility, Fidelity Small Mid Cap is 1.18 times less risky than Harbor SMID. It trades about 0.14 of its potential returns per unit of risk. Harbor SMID Cap is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,017  in Harbor SMID Cap on May 6, 2025 and sell it today you would earn a total of  201.00  from holding Harbor SMID Cap or generate 9.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Fidelity Small Mid Cap  vs.  Harbor SMID Cap

Fidelity Small Mid

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Small Mid Cap are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Fidelity Small may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Harbor SMID Cap

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor SMID Cap are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Harbor SMID may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Fidelity Small and Harbor SMID

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

The idea behind Fidelity Small Mid Cap and Harbor SMID 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.