Correlation Between Fidelity Canadian and IShares SPTSX
Can any of the company-specific risk be diversified away by investing in both Fidelity Canadian and IShares SPTSX 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 Fidelity Canadian and IShares SPTSX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Canadian High and iShares SPTSX Composite, you can compare the effects of market volatilities on Fidelity Canadian and IShares SPTSX 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 Fidelity Canadian with a short position of IShares SPTSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Canadian and IShares SPTSX.
Diversification Opportunities for Fidelity Canadian and IShares SPTSX
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Fidelity and IShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Canadian High and iShares SPTSX Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SPTSX Composite and Fidelity Canadian 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 Fidelity Canadian High are associated (or correlated) with IShares SPTSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SPTSX Composite has no effect on the direction of Fidelity Canadian i.e., Fidelity Canadian and IShares SPTSX go up and down completely randomly.
Pair Corralation between Fidelity Canadian and IShares SPTSX
Assuming the 90 days trading horizon Fidelity Canadian High is expected to generate 0.95 times more return on investment than IShares SPTSX. However, Fidelity Canadian High is 1.05 times less risky than IShares SPTSX. It trades about 0.24 of its potential returns per unit of risk. iShares SPTSX Composite is currently generating about 0.15 per unit of risk. If you would invest 3,021 in Fidelity Canadian High on September 13, 2024 and sell it today you would earn a total of 59.00 from holding Fidelity Canadian High or generate 1.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Canadian High vs. iShares SPTSX Composite
Performance |
| Timeline |
| Fidelity Canadian High |
| iShares SPTSX Composite |
Fidelity Canadian and IShares SPTSX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Canadian and IShares SPTSX
The main advantage of trading using opposite Fidelity Canadian and IShares SPTSX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Canadian position performs unexpectedly, IShares SPTSX 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 IShares SPTSX will offset losses from the drop in IShares SPTSX's long position.| Fidelity Canadian vs. Fidelity High Dividend | Fidelity Canadian vs. Fidelity International High | Fidelity Canadian vs. Fidelity High Dividend | Fidelity Canadian vs. Fidelity Dividend for |
| IShares SPTSX vs. Vanguard FTSE Canadian | IShares SPTSX vs. BMO Canadian Dividend | IShares SPTSX vs. Vanguard FTSE Canadian | IShares SPTSX vs. iShares Core SPTSX |
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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