Correlation Between Fidelity Europe and Fidelity Pacific
Can any of the company-specific risk be diversified away by investing in both Fidelity Europe and Fidelity Pacific 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 Europe and Fidelity Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Europe Fund and Fidelity Pacific Basin, you can compare the effects of market volatilities on Fidelity Europe and Fidelity Pacific 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 Europe with a short position of Fidelity Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Europe and Fidelity Pacific.
Diversification Opportunities for Fidelity Europe and Fidelity Pacific
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Fidelity and Fidelity is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Europe Fund and Fidelity Pacific Basin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Pacific Basin and Fidelity Europe 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 Europe Fund are associated (or correlated) with Fidelity Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Pacific Basin has no effect on the direction of Fidelity Europe i.e., Fidelity Europe and Fidelity Pacific go up and down completely randomly.
Pair Corralation between Fidelity Europe and Fidelity Pacific
Assuming the 90 days horizon Fidelity Europe is expected to generate 1.33 times less return on investment than Fidelity Pacific. But when comparing it to its historical volatility, Fidelity Europe Fund is 1.3 times less risky than Fidelity Pacific. It trades about 0.06 of its potential returns per unit of risk. Fidelity Pacific Basin is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,857 in Fidelity Pacific Basin on September 12, 2024 and sell it today you would earn a total of 559.00 from holding Fidelity Pacific Basin or generate 19.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Europe Fund vs. Fidelity Pacific Basin
Performance |
| Timeline |
| Fidelity Europe |
| Fidelity Pacific Basin |
Fidelity Europe and Fidelity Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Europe and Fidelity Pacific
The main advantage of trading using opposite Fidelity Europe and Fidelity Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Europe position performs unexpectedly, Fidelity Pacific 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 Pacific will offset losses from the drop in Fidelity Pacific's long position.| Fidelity Europe vs. T Rowe Price | Fidelity Europe vs. Ab Global Risk | Fidelity Europe vs. Ab Global Risk | Fidelity Europe vs. Fa 529 Aggressive |
| Fidelity Pacific vs. Fidelity Europe Fund | Fidelity Pacific vs. Fidelity Japan Fund | Fidelity Pacific vs. Fidelity Emerging Asia | Fidelity Pacific vs. Fidelity Nordic 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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