Correlation Between Communication Services and Fidelity Small

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

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

Diversification Opportunities for Communication Services and Fidelity Small

0.42

Correlation Coefficient

Communication Services  Fidelity Small

Very weak diversification

The 3 months correlation between Communication and Fidelity is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Communication Services Select and Fidelity Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Small Cap and Communication Services 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 Communication Services Select are associated (or correlated) with Fidelity Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Small Cap has no effect on the direction of Communication Services i.e., Communication Services and Fidelity Small go up and down completely randomly.

Pair Corralation between Communication Services and Fidelity Small

Considering the 90-day investment horizon Communication Services is expected to generate 1.1 times less return on investment than Fidelity Small. But when comparing it to its historical volatility, Communication Services Select is 1.68 times less risky than Fidelity Small. It trades about 0.16 of its potential returns per unit of risk. Fidelity Small Cap is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,085  in Fidelity Small Cap on September 10, 2025 and sell it today you would earn a total of  86.00  from holding Fidelity Small Cap or generate 2.79% return on investment over 90 days.

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

Communication Services Select  vs.  Fidelity Small Cap

Communication Services

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Communication Services Select are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Communication Services is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Fidelity Small Cap

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Small Cap are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity Small may actually be approaching a critical reversion point that can send shares even higher in January 2026.

Pair Trading with Communication Services and Fidelity Small

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

The idea behind Communication Services Select and Fidelity Small 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.