Correlation Between American Funds and Fidelity Worldwide
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Fidelity Worldwide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds New and Fidelity Worldwide Fund, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Fidelity Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Fidelity Worldwide.
Diversification Opportunities for American Funds and Fidelity Worldwide
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Fidelity is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding American Funds New and Fidelity Worldwide Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Worldwide and American Funds 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 American Funds New 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 American Funds i.e., American Funds and Fidelity Worldwide go up and down completely randomly.
Pair Corralation between American Funds and Fidelity Worldwide
Assuming the 90 days horizon American Funds is expected to generate 1.24 times less return on investment than Fidelity Worldwide. But when comparing it to its historical volatility, American Funds New is 1.32 times less risky than Fidelity Worldwide. It trades about 0.09 of its potential returns per unit of risk. Fidelity Worldwide Fund is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,526 in Fidelity Worldwide Fund on September 3, 2024 and sell it today you would earn a total of 444.00 from holding Fidelity Worldwide Fund or generate 12.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds New vs. Fidelity Worldwide Fund
Performance |
| Timeline |
| American Funds New |
| Fidelity Worldwide |
American Funds and Fidelity Worldwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Fidelity Worldwide
The main advantage of trading using opposite American Funds and Fidelity Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. The Hartford Small | American Funds vs. Oklahoma College Savings | American Funds vs. Ab Small Cap | American Funds vs. Small Cap Value |
| Fidelity Worldwide vs. American Funds New | Fidelity Worldwide vs. American Funds New | Fidelity Worldwide vs. New Perspective Fund | Fidelity Worldwide vs. New Perspective Fund |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |