Correlation Between Fidelity New and Eafe Choice
Can any of the company-specific risk be diversified away by investing in both Fidelity New and Eafe Choice 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 New and Eafe Choice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity New Markets and The Eafe Choice, you can compare the effects of market volatilities on Fidelity New and Eafe Choice 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 New with a short position of Eafe Choice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity New and Eafe Choice.
Diversification Opportunities for Fidelity New and Eafe Choice
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fidelity and Eafe is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity New Markets and The Eafe Choice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eafe Choice and Fidelity New 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 New Markets are associated (or correlated) with Eafe Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eafe Choice has no effect on the direction of Fidelity New i.e., Fidelity New and Eafe Choice go up and down completely randomly.
Pair Corralation between Fidelity New and Eafe Choice
Assuming the 90 days horizon Fidelity New Markets is expected to generate 0.18 times more return on investment than Eafe Choice. However, Fidelity New Markets is 5.7 times less risky than Eafe Choice. It trades about -0.42 of its potential returns per unit of risk. The Eafe Choice is currently generating about -0.32 per unit of risk. If you would invest 1,300 in Fidelity New Markets on October 9, 2024 and sell it today you would lose (29.00) from holding Fidelity New Markets or give up 2.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity New Markets vs. The Eafe Choice
Performance |
| Timeline |
| Fidelity New Markets |
| Eafe Choice |
Fidelity New and Eafe Choice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity New and Eafe Choice
The main advantage of trading using opposite Fidelity New and Eafe Choice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity New position performs unexpectedly, Eafe Choice 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 Eafe Choice will offset losses from the drop in Eafe Choice's long position.| Fidelity New vs. Hennessy Bp Energy | Fidelity New vs. Thrivent Natural Resources | Fidelity New vs. Firsthand Alternative Energy | Fidelity New vs. Transamerica Mlp Energy |
| Eafe Choice vs. Hunter Small Cap | Eafe Choice vs. Ab Small Cap | Eafe Choice vs. Touchstone Small Cap | Eafe Choice vs. Franklin Small Cap |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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