Correlation Between T Rowe and Fidelity Large

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

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

Diversification Opportunities for T Rowe and Fidelity Large

0.97

Correlation Coefficient

T Rowe  Fidelity Large

Almost no diversification

The 3 months correlation between TRBCX and Fidelity is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price 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 T Rowe 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 T Rowe Price 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 T Rowe i.e., T Rowe and Fidelity Large go up and down completely randomly.

Pair Corralation between T Rowe and Fidelity Large

Assuming the 90 days horizon T Rowe Price is expected to under-perform the Fidelity Large. In addition to that, T Rowe is 1.21 times more volatile than Fidelity Large Cap. It trades about -0.03 of its total potential returns per unit of risk. Fidelity Large Cap is currently generating about -0.01 per unit of volatility. If you would invest  1,597  in Fidelity Large Cap on February 3, 2025 and sell it today you would lose (50.00) from holding Fidelity Large Cap or give up 3.13% of portfolio value over 90 days.

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

T Rowe Price  vs.  Fidelity Large Cap

T Rowe Price

Risk-Adjusted Performance

Very Weak

Over the last 90 days T Rowe Price has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, T Rowe 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 fairly strong forward-looking signals, Fidelity Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with T Rowe and Fidelity Large

The main advantage of trading using opposite T Rowe and Fidelity Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe 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 T Rowe Price 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.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.