Correlation Between Fidelity Sustainable and Xtrackers ESG
Can any of the company-specific risk be diversified away by investing in both Fidelity Sustainable and Xtrackers ESG 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 Sustainable and Xtrackers ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Sustainable EUR and Xtrackers ESG USD, you can compare the effects of market volatilities on Fidelity Sustainable and Xtrackers ESG 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 Sustainable with a short position of Xtrackers ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Sustainable and Xtrackers ESG.
Diversification Opportunities for Fidelity Sustainable and Xtrackers ESG
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Xtrackers is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Sustainable EUR and Xtrackers ESG USD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers ESG USD and Fidelity Sustainable 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 Sustainable EUR are associated (or correlated) with Xtrackers ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers ESG USD has no effect on the direction of Fidelity Sustainable i.e., Fidelity Sustainable and Xtrackers ESG go up and down completely randomly.
Pair Corralation between Fidelity Sustainable and Xtrackers ESG
Assuming the 90 days trading horizon Fidelity Sustainable is expected to generate 1.33 times less return on investment than Xtrackers ESG. But when comparing it to its historical volatility, Fidelity Sustainable EUR is 1.47 times less risky than Xtrackers ESG. It trades about 0.21 of its potential returns per unit of risk. Xtrackers ESG USD is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 762.00 in Xtrackers ESG USD on November 4, 2024 and sell it today you would earn a total of 9.00 from holding Xtrackers ESG USD or generate 1.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Sustainable EUR vs. Xtrackers ESG USD
Performance |
| Timeline |
| Fidelity Sustainable EUR |
| Xtrackers ESG USD |
Fidelity Sustainable and Xtrackers ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Sustainable and Xtrackers ESG
The main advantage of trading using opposite Fidelity Sustainable and Xtrackers ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Sustainable position performs unexpectedly, Xtrackers ESG 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 Xtrackers ESG will offset losses from the drop in Xtrackers ESG's long position.The idea behind Fidelity Sustainable EUR and Xtrackers ESG USD 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.
| Xtrackers ESG vs. Xtrackers MSCI | Xtrackers ESG vs. Xtrackers FTSE 250 | Xtrackers ESG vs. Xtrackers Ie Plc | Xtrackers ESG vs. Xtrackers Russell 2000 |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |