Correlation Between Fidelity Small and Fidelity International
Can any of the company-specific risk be diversified away by investing in both Fidelity Small and Fidelity International 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 Small and Fidelity International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Small Cap and Fidelity International Enhanced, you can compare the effects of market volatilities on Fidelity Small and Fidelity International 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 Small with a short position of Fidelity International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Small and Fidelity International.
Diversification Opportunities for Fidelity Small and Fidelity International
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Small Cap and Fidelity International Enhance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity International and Fidelity 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 Fidelity Small Cap are associated (or correlated) with Fidelity International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity International has no effect on the direction of Fidelity Small i.e., Fidelity Small and Fidelity International go up and down completely randomly.
Pair Corralation between Fidelity Small and Fidelity International
Assuming the 90 days horizon Fidelity Small Cap is expected to generate 1.5 times more return on investment than Fidelity International. However, Fidelity Small is 1.5 times more volatile than Fidelity International Enhanced. It trades about 0.06 of its potential returns per unit of risk. Fidelity International Enhanced is currently generating about 0.08 per unit of risk. If you would invest 1,230 in Fidelity Small Cap on September 3, 2024 and sell it today you would earn a total of 132.00 from holding Fidelity Small Cap or generate 10.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Small Cap vs. Fidelity International Enhance
Performance |
| Timeline |
| Fidelity Small Cap |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Fidelity International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Fidelity Small and Fidelity International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Small and Fidelity International
The main advantage of trading using opposite Fidelity Small and Fidelity International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Small position performs unexpectedly, Fidelity International 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 International will offset losses from the drop in Fidelity International's long position.The idea behind Fidelity Small Cap and Fidelity International Enhanced pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Fidelity International vs. Fidelity International Value | Fidelity International vs. Fidelity 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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