Correlation Between Barings Emerging and Fidelity Small
Can any of the company-specific risk be diversified away by investing in both Barings Emerging 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 Barings Emerging and Fidelity Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings Emerging Markets and Fidelity Small Cap, you can compare the effects of market volatilities on Barings Emerging 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 Barings Emerging with a short position of Fidelity Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Emerging and Fidelity Small.
Diversification Opportunities for Barings Emerging and Fidelity Small
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barings and Fidelity is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Barings Emerging Markets 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 Barings Emerging 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 Barings Emerging Markets 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 Barings Emerging i.e., Barings Emerging and Fidelity Small go up and down completely randomly.
Pair Corralation between Barings Emerging and Fidelity Small
Assuming the 90 days horizon Barings Emerging is expected to generate 1.6 times less return on investment than Fidelity Small. But when comparing it to its historical volatility, Barings Emerging Markets is 3.13 times less risky than Fidelity Small. It trades about 0.05 of its potential returns per unit of risk. Fidelity Small Cap is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,903 in Fidelity Small Cap on September 12, 2024 and sell it today you would earn a total of 184.00 from holding Fidelity Small Cap or generate 9.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings Emerging Markets vs. Fidelity Small Cap
Performance |
| Timeline |
| Barings Emerging Markets |
| Fidelity Small Cap |
Barings Emerging and Fidelity Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Emerging and Fidelity Small
The main advantage of trading using opposite Barings Emerging and Fidelity Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Emerging 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.| Barings Emerging vs. Fidelity New Markets | Barings Emerging vs. Fidelity New Markets | Barings Emerging vs. Fidelity New Markets | Barings Emerging vs. SCOR PK |
| Fidelity Small vs. Extended Market Index | Fidelity Small vs. Barings Emerging Markets | Fidelity Small vs. Pnc Emerging Markets | Fidelity Small vs. Locorr Market Trend |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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