Correlation Between Dow Jones and Fidelity Total
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Fidelity Total 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 Dow Jones and Fidelity Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Fidelity Total International, you can compare the effects of market volatilities on Dow Jones and Fidelity Total 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 Dow Jones with a short position of Fidelity Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Fidelity Total.
Diversification Opportunities for Dow Jones and Fidelity Total
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Fidelity is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Fidelity Total International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Total Inter and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Fidelity Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Total Inter has no effect on the direction of Dow Jones i.e., Dow Jones and Fidelity Total go up and down completely randomly.
Pair Corralation between Dow Jones and Fidelity Total
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.9 times more return on investment than Fidelity Total. However, Dow Jones Industrial is 1.11 times less risky than Fidelity Total. It trades about 0.15 of its potential returns per unit of risk. Fidelity Total International is currently generating about 0.02 per unit of risk. If you would invest 3,868,632 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 603,574 from holding Dow Jones Industrial or generate 15.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Fidelity Total International
Performance |
| Timeline |
Dow Jones and Fidelity Total Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Fidelity Total International
Pair trading matchups for Fidelity Total
Pair Trading with Dow Jones and Fidelity Total
The main advantage of trading using opposite Dow Jones and Fidelity Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Fidelity Total 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 Total will offset losses from the drop in Fidelity Total's long position.| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
| Fidelity Total vs. Vanguard Total International | Fidelity Total vs. Vanguard Total International | Fidelity Total vs. Vanguard Total International | Fidelity Total vs. Vanguard Total International |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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