Correlation Between Dow Jones and Fidelity Worldwide
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Fidelity Worldwide 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 Worldwide 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 Worldwide Fund, you can compare the effects of market volatilities on Dow Jones and Fidelity Worldwide 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 Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Fidelity Worldwide.
Diversification Opportunities for Dow Jones and Fidelity Worldwide
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and Fidelity is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Fidelity Worldwide Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Worldwide 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 Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Worldwide has no effect on the direction of Dow Jones i.e., Dow Jones and Fidelity Worldwide go up and down completely randomly.
Pair Corralation between Dow Jones and Fidelity Worldwide
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.68 times more return on investment than Fidelity Worldwide. However, Dow Jones Industrial is 1.47 times less risky than Fidelity Worldwide. It trades about 0.16 of its potential returns per unit of risk. Fidelity Worldwide Fund is currently generating about 0.07 per unit of risk. If you would invest 3,857,103 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 633,962 from holding Dow Jones Industrial or generate 16.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Dow Jones Industrial vs. Fidelity Worldwide Fund
Performance |
| Timeline |
Dow Jones and Fidelity Worldwide Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Fidelity Worldwide Fund
Pair trading matchups for Fidelity Worldwide
Pair Trading with Dow Jones and Fidelity Worldwide
The main advantage of trading using opposite Dow Jones and Fidelity Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Fidelity Worldwide 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 Worldwide will offset losses from the drop in Fidelity Worldwide's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Fidelity Worldwide vs. Fidelity Worldwide Fund | Fidelity Worldwide vs. Fidelity Worldwide Fund | Fidelity Worldwide vs. Fidelity International Small | Fidelity Worldwide vs. Fidelity International Small |
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.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |