Correlation Between Applied Finance and Fidelity International
Can any of the company-specific risk be diversified away by investing in both Applied Finance 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 Applied Finance and Fidelity International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Finance Explorer and Fidelity International Real, you can compare the effects of market volatilities on Applied Finance 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 Applied Finance with a short position of Fidelity International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Fidelity International.
Diversification Opportunities for Applied Finance and Fidelity International
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Applied and Fidelity is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Fidelity International Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity International and Applied Finance 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 Applied Finance Explorer 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 Applied Finance i.e., Applied Finance and Fidelity International go up and down completely randomly.
Pair Corralation between Applied Finance and Fidelity International
Assuming the 90 days horizon Applied Finance Explorer is expected to generate 1.5 times more return on investment than Fidelity International. However, Applied Finance is 1.5 times more volatile than Fidelity International Real. It trades about 0.04 of its potential returns per unit of risk. Fidelity International Real is currently generating about -0.02 per unit of risk. If you would invest 1,828 in Applied Finance Explorer on November 2, 2024 and sell it today you would earn a total of 432.00 from holding Applied Finance Explorer or generate 23.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Applied Finance Explorer vs. Fidelity International Real
Performance |
| Timeline |
| Applied Finance Explorer |
| Fidelity International |
Applied Finance and Fidelity International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Finance and Fidelity International
The main advantage of trading using opposite Applied Finance and Fidelity International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance 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.| Applied Finance vs. Thrivent Small Cap | Applied Finance vs. Applied Finance Select | Applied Finance vs. Parnassus Endeavor Fund | Applied Finance vs. Queens Road Small |
| Fidelity International vs. Vanguard Developed Markets | Fidelity International vs. Franklin Emerging Market | Fidelity International vs. Aqr Equity Market | Fidelity International vs. Old Westbury Short Term |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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