Correlation Between Fidelity Small and Foundry Partners

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

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

Diversification Opportunities for Fidelity Small and Foundry Partners

0.99

Correlation Coefficient

Fidelity Small  Foundry Partners

No risk reduction

The 3 months correlation between Fidelity and Foundry is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Small Cap and Foundry Partners Fundamental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foundry Partners Fun 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 Cap are associated (or correlated) with Foundry Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foundry Partners Fun has no effect on the direction of Fidelity Small i.e., Fidelity Small and Foundry Partners go up and down completely randomly.

Pair Corralation between Fidelity Small and Foundry Partners

Assuming the 90 days horizon Fidelity Small Cap is expected to generate 1.12 times more return on investment than Foundry Partners. However, Fidelity Small is 1.12 times more volatile than Foundry Partners Fundamental. It trades about 0.48 of its potential returns per unit of risk. Foundry Partners Fundamental is currently generating about 0.48 per unit of risk. If you would invest  1,735  in Fidelity Small Cap on February 20, 2025 and sell it today you would earn a total of  243.00  from holding Fidelity Small Cap or generate 14.01% return on investment over 90 days.

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

Fidelity Small Cap  vs.  Foundry Partners Fundamental

Fidelity Small Cap

Risk-Adjusted Performance

Very Weak

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

Foundry Partners Fun

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Fidelity Small and Foundry Partners

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

The idea behind Fidelity Small Cap and Foundry Partners Fundamental 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.