Correlation Between Moderate Strategy and Fidelity Large

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

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

Diversification Opportunities for Moderate Strategy and Fidelity Large

0.99

Correlation Coefficient

Moderate Strategy  Fidelity Large

No risk reduction

The 3 months correlation between Moderate and Fidelity is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Moderate Strategy Fund 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 Moderate Strategy 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 Moderate Strategy Fund 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 Moderate Strategy i.e., Moderate Strategy and Fidelity Large go up and down completely randomly.

Pair Corralation between Moderate Strategy and Fidelity Large

Assuming the 90 days horizon Moderate Strategy is expected to generate 3.05 times less return on investment than Fidelity Large. But when comparing it to its historical volatility, Moderate Strategy Fund is 1.98 times less risky than Fidelity Large. It trades about 0.24 of its potential returns per unit of risk. Fidelity Large Cap is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  1,498  in Fidelity Large Cap on May 2, 2025 and sell it today you would earn a total of  239.00  from holding Fidelity Large Cap or generate 15.95% return on investment over 90 days.

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

Moderate Strategy Fund  vs.  Fidelity Large Cap

Moderate Strategy

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Moderate Strategy Fund are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Moderate Strategy 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

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Large Cap are ranked lower than 29 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Fidelity Large showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Moderate Strategy and Fidelity Large

The main advantage of trading using opposite Moderate Strategy and Fidelity Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moderate Strategy 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 Moderate Strategy Fund 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.