Correlation Between Fidelity International and International Investors
Can any of the company-specific risk be diversified away by investing in both Fidelity International and International Investors 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 International and International Investors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity International Discovery and International Investors Gold, you can compare the effects of market volatilities on Fidelity International and International Investors 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 International with a short position of International Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity International and International Investors.
Diversification Opportunities for Fidelity International and International Investors
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Fidelity and INTERNATIONAL is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity International Discove and International Investors Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Investors and Fidelity International 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 International Discovery are associated (or correlated) with International Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Investors has no effect on the direction of Fidelity International i.e., Fidelity International and International Investors go up and down completely randomly.
Pair Corralation between Fidelity International and International Investors
Assuming the 90 days horizon Fidelity International Discovery is expected to generate 0.38 times more return on investment than International Investors. However, Fidelity International Discovery is 2.66 times less risky than International Investors. It trades about 0.05 of its potential returns per unit of risk. International Investors Gold is currently generating about -0.14 per unit of risk. If you would invest 5,017 in Fidelity International Discovery on September 2, 2024 and sell it today you would earn a total of 39.00 from holding Fidelity International Discovery or generate 0.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity International Discove vs. International Investors Gold
Performance |
| Timeline |
| Fidelity International |
| International Investors |
Fidelity International and International Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity International and International Investors
The main advantage of trading using opposite Fidelity International and International Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity International position performs unexpectedly, International Investors 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 International Investors will offset losses from the drop in International Investors' long position.The idea behind Fidelity International Discovery and International Investors Gold pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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