Correlation Between Fidelity China and Wcm China
Can any of the company-specific risk be diversified away by investing in both Fidelity China and Wcm China 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 China and Wcm China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity China Region and Wcm China Quality, you can compare the effects of market volatilities on Fidelity China and Wcm China 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 China with a short position of Wcm China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity China and Wcm China.
Diversification Opportunities for Fidelity China and Wcm China
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Wcm is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity China Region and Wcm China Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wcm China Quality and Fidelity China 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 China Region are associated (or correlated) with Wcm China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wcm China Quality has no effect on the direction of Fidelity China i.e., Fidelity China and Wcm China go up and down completely randomly.
Pair Corralation between Fidelity China and Wcm China
Assuming the 90 days horizon Fidelity China Region is expected to under-perform the Wcm China. But the mutual fund apears to be less risky and, when comparing its historical volatility, Fidelity China Region is 1.05 times less risky than Wcm China. The mutual fund trades about -0.16 of its potential returns per unit of risk. The Wcm China Quality is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 907.00 in Wcm China Quality on September 2, 2024 and sell it today you would lose (35.00) from holding Wcm China Quality or give up 3.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity China Region vs. Wcm China Quality
Performance |
| Timeline |
| Fidelity China Region |
| Wcm China Quality |
Fidelity China and Wcm China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity China and Wcm China
The main advantage of trading using opposite Fidelity China and Wcm China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity China position performs unexpectedly, Wcm China 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 Wcm China will offset losses from the drop in Wcm China's long position.| Fidelity China vs. Ab High Income | Fidelity China vs. California High Yield Municipal | Fidelity China vs. Siit High Yield | Fidelity China vs. Artisan High Income |
| Wcm China vs. Small Midcap Dividend Income | Wcm China vs. Rational Defensive Growth | Wcm China vs. Growth Opportunities Fund | Wcm China vs. Champlain Mid 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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