Correlation Between Fidelity Global and Fidelity Focused
Can any of the company-specific risk be diversified away by investing in both Fidelity Global and Fidelity Focused 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 Global and Fidelity Focused into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Global Bond and Fidelity Focused High, you can compare the effects of market volatilities on Fidelity Global and Fidelity Focused 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 Global with a short position of Fidelity Focused. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Global and Fidelity Focused.
Diversification Opportunities for Fidelity Global and Fidelity Focused
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 Global Bond and Fidelity Focused High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Focused High and Fidelity Global 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 Global Bond are associated (or correlated) with Fidelity Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Focused High has no effect on the direction of Fidelity Global i.e., Fidelity Global and Fidelity Focused go up and down completely randomly.
Pair Corralation between Fidelity Global and Fidelity Focused
Assuming the 90 days horizon Fidelity Global Bond is expected to generate 1.74 times more return on investment than Fidelity Focused. However, Fidelity Global is 1.74 times more volatile than Fidelity Focused High. It trades about 0.19 of its potential returns per unit of risk. Fidelity Focused High is currently generating about 0.23 per unit of risk. If you would invest 759.00 in Fidelity Global Bond on September 1, 2024 and sell it today you would earn a total of 53.00 from holding Fidelity Global Bond or generate 6.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Global Bond vs. Fidelity Focused High
Performance |
| Timeline |
| Fidelity Global Bond |
| Fidelity Focused High |
Fidelity Global and Fidelity Focused Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Global and Fidelity Focused
The main advantage of trading using opposite Fidelity Global and Fidelity Focused positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Global position performs unexpectedly, Fidelity Focused 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 Focused will offset losses from the drop in Fidelity Focused's long position.| Fidelity Global vs. Fidelity Short Term Bond | Fidelity Global vs. Fidelity Short Term Treasury | Fidelity Global vs. Fidelity Mid Cap | Fidelity Global vs. Fidelity Emerging Markets |
| Fidelity Focused vs. Fidelity High Income | Fidelity Focused vs. Fidelity Advisor Mortgage | Fidelity Focused vs. Fidelity Advisor Floating | Fidelity Focused vs. Fidelity Total Bond |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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