Correlation Between Champlain Small and Fidelity Large

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

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

Diversification Opportunities for Champlain Small and Fidelity Large

0.88

Correlation Coefficient

Champlain Small  Fidelity Large

Very poor diversification

The 3 months correlation between Champlain and Fidelity is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Small 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 Champlain 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 Champlain Small 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 Champlain Small i.e., Champlain Small and Fidelity Large go up and down completely randomly.

Pair Corralation between Champlain Small and Fidelity Large

Assuming the 90 days horizon Champlain Small is expected to generate 1.67 times less return on investment than Fidelity Large. In addition to that, Champlain Small is 1.47 times more volatile than Fidelity Large Cap. It trades about 0.18 of its total potential returns per unit of risk. Fidelity Large Cap is currently generating about 0.43 per unit of volatility. If you would invest  1,547  in Fidelity Large Cap on March 10, 2025 and sell it today you would earn a total of  120.00  from holding Fidelity Large Cap or generate 7.76% return on investment over 90 days.

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

Champlain Small  vs.  Fidelity Large Cap

Champlain Small

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Champlain Small are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Champlain Small may actually be approaching a critical reversion point that can send shares even higher in July 2025.

Fidelity Large Cap

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Large Cap are ranked lower than 8 (%) 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 Champlain Small and Fidelity Large

The main advantage of trading using opposite Champlain Small and Fidelity Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champlain Small 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 Champlain Small 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.