Correlation Between Brandes Small and Fidelity Series
Can any of the company-specific risk be diversified away by investing in both Brandes Small and Fidelity Series 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 Brandes Small and Fidelity Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brandes Small Cap and Fidelity Series Government, you can compare the effects of market volatilities on Brandes Small and Fidelity Series 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 Brandes Small with a short position of Fidelity Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brandes Small and Fidelity Series.
Diversification Opportunities for Brandes Small and Fidelity Series
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Brandes and Fidelity is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Brandes Small Cap and Fidelity Series Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Series Gove and Brandes 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 Brandes Small Cap are associated (or correlated) with Fidelity Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Series Gove has no effect on the direction of Brandes Small i.e., Brandes Small and Fidelity Series go up and down completely randomly.
Pair Corralation between Brandes Small and Fidelity Series
Assuming the 90 days horizon Brandes Small Cap is expected to under-perform the Fidelity Series. In addition to that, Brandes Small is 3.15 times more volatile than Fidelity Series Government. It trades about -0.21 of its total potential returns per unit of risk. Fidelity Series Government is currently generating about 0.26 per unit of volatility. If you would invest 901.00 in Fidelity Series Government on November 28, 2024 and sell it today you would earn a total of 14.00 from holding Fidelity Series Government or generate 1.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brandes Small Cap vs. Fidelity Series Government
Performance |
| Timeline |
| Brandes Small Cap |
| Fidelity Series Gove |
Brandes Small and Fidelity Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brandes Small and Fidelity Series
The main advantage of trading using opposite Brandes Small and Fidelity Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brandes Small position performs unexpectedly, Fidelity Series 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 Series will offset losses from the drop in Fidelity Series' long position.| Brandes Small vs. Templeton Developing Markets | Brandes Small vs. Ep Emerging Markets | Brandes Small vs. Investec Emerging Markets | Brandes Small vs. Barings Emerging Markets |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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