Correlation Between Fidelity New and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Fidelity New and Emerging Markets 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 Emerging Markets 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 Emerging Markets Bond, you can compare the effects of market volatilities on Fidelity New and Emerging Markets 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 Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity New and Emerging Markets.
Diversification Opportunities for Fidelity New and Emerging Markets
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Emerging is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity New Markets and Emerging Markets Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Bond 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 Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Bond has no effect on the direction of Fidelity New i.e., Fidelity New and Emerging Markets go up and down completely randomly.
Pair Corralation between Fidelity New and Emerging Markets
Assuming the 90 days horizon Fidelity New Markets is expected to generate 1.06 times more return on investment than Emerging Markets. However, Fidelity New is 1.06 times more volatile than Emerging Markets Bond. It trades about 0.3 of its potential returns per unit of risk. Emerging Markets Bond is currently generating about 0.29 per unit of risk. If you would invest 1,280 in Fidelity New Markets on September 13, 2024 and sell it today you would earn a total of 18.00 from holding Fidelity New Markets or generate 1.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity New Markets vs. Emerging Markets Bond
Performance |
| Timeline |
| Fidelity New Markets |
| Emerging Markets Bond |
Fidelity New and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity New and Emerging Markets
The main advantage of trading using opposite Fidelity New and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity New position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Fidelity New vs. Baillie Gifford Health | Fidelity New vs. Invesco Global Health | Fidelity New vs. Tekla Healthcare Opportunities | Fidelity New vs. Alger Health Sciences |
| Emerging Markets vs. Ab Global Bond | Emerging Markets vs. Franklin Mutual Global | Emerging Markets vs. Ab Global Risk | Emerging Markets vs. Ab Global Risk |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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