Correlation Between Applied Finance and Fidelity China
Can any of the company-specific risk be diversified away by investing in both Applied Finance and Fidelity China 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 China 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 China Region, you can compare the effects of market volatilities on Applied Finance and Fidelity China 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 China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Fidelity China.
Diversification Opportunities for Applied Finance and Fidelity China
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Applied and Fidelity is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Fidelity China Region in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity China Region 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 China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity China Region has no effect on the direction of Applied Finance i.e., Applied Finance and Fidelity China go up and down completely randomly.
Pair Corralation between Applied Finance and Fidelity China
Assuming the 90 days horizon Applied Finance Explorer is expected to generate 1.48 times more return on investment than Fidelity China. However, Applied Finance is 1.48 times more volatile than Fidelity China Region. It trades about 0.06 of its potential returns per unit of risk. Fidelity China Region is currently generating about 0.04 per unit of risk. If you would invest 2,104 in Applied Finance Explorer on September 1, 2024 and sell it today you would earn a total of 324.00 from holding Applied Finance Explorer or generate 15.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Finance Explorer vs. Fidelity China Region
Performance |
| Timeline |
| Applied Finance Explorer |
| Fidelity China Region |
Applied Finance and Fidelity China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Finance and Fidelity China
The main advantage of trading using opposite Applied Finance and Fidelity China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance position performs unexpectedly, Fidelity China 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 China will offset losses from the drop in Fidelity China'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 China vs. Lord Abbett Small | Fidelity China vs. Mutual Of America | Fidelity China vs. Applied Finance Explorer | Fidelity China vs. Pace Smallmedium Value |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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