Correlation Between Fidelity Momentum and Fidelity International
Can any of the company-specific risk be diversified away by investing in both Fidelity Momentum 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 Momentum 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 Momentum Factor and Fidelity International Value, you can compare the effects of market volatilities on Fidelity Momentum 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 Momentum with a short position of Fidelity International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Momentum and Fidelity International.
Diversification Opportunities for Fidelity Momentum and Fidelity International
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fidelity and Fidelity is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Momentum Factor and Fidelity International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity International and Fidelity Momentum 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 Momentum Factor 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 Momentum i.e., Fidelity Momentum and Fidelity International go up and down completely randomly.
Pair Corralation between Fidelity Momentum and Fidelity International
Given the investment horizon of 90 days Fidelity Momentum Factor is expected to generate 1.11 times more return on investment than Fidelity International. However, Fidelity Momentum is 1.11 times more volatile than Fidelity International Value. It trades about 0.42 of its potential returns per unit of risk. Fidelity International Value is currently generating about -0.02 per unit of risk. If you would invest 6,620 in Fidelity Momentum Factor on September 1, 2024 and sell it today you would earn a total of 583.00 from holding Fidelity Momentum Factor or generate 8.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Fidelity Momentum Factor vs. Fidelity International Value
Performance |
| Timeline |
| Fidelity Momentum Factor |
| Fidelity International |
Fidelity Momentum and Fidelity International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Momentum and Fidelity International
The main advantage of trading using opposite Fidelity Momentum and Fidelity International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Momentum 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.| Fidelity Momentum vs. FT Vest Equity | Fidelity Momentum vs. Northern Lights | Fidelity Momentum vs. Dimensional International High | Fidelity Momentum vs. Matthews China Discovery |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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