Correlation Between Focused International and Fidelity International
Can any of the company-specific risk be diversified away by investing in both Focused International and Fidelity International 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 Focused International and Fidelity International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Focused International Growth and Fidelity International Growth, you can compare the effects of market volatilities on Focused International and Fidelity International 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 Focused International with a short position of Fidelity International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focused International and Fidelity International.
Diversification Opportunities for Focused International and Fidelity International
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Focused and Fidelity is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Focused International Growth and Fidelity International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity International and Focused International 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 Focused International Growth are associated (or correlated) with Fidelity International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity International has no effect on the direction of Focused International i.e., Focused International and Fidelity International go up and down completely randomly.
Pair Corralation between Focused International and Fidelity International
Assuming the 90 days horizon Focused International is expected to generate 2.54 times less return on investment than Fidelity International. In addition to that, Focused International is 1.05 times more volatile than Fidelity International Growth. It trades about 0.06 of its total potential returns per unit of risk. Fidelity International Growth is currently generating about 0.15 per unit of volatility. If you would invest 2,051 in Fidelity International Growth on September 4, 2024 and sell it today you would earn a total of 52.00 from holding Fidelity International Growth or generate 2.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Focused International Growth vs. Fidelity International Growth
Performance |
| Timeline |
| Focused International |
| Fidelity International |
Focused International and Fidelity International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Focused International and Fidelity International
The main advantage of trading using opposite Focused International and Fidelity International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focused International position performs unexpectedly, Fidelity International 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 International will offset losses from the drop in Fidelity International's long position.| Focused International vs. Value Fund Investor | Focused International vs. Ultra Fund Investor | Focused International vs. Growth Fund Investor | Focused International vs. Income Growth Fund |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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