Correlation Between Fidelity Canada and Dimensional Retirement
Can any of the company-specific risk be diversified away by investing in both Fidelity Canada and Dimensional Retirement 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 Canada and Dimensional Retirement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Canada Fund and Dimensional Retirement Income, you can compare the effects of market volatilities on Fidelity Canada and Dimensional Retirement 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 Canada with a short position of Dimensional Retirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Canada and Dimensional Retirement.
Diversification Opportunities for Fidelity Canada and Dimensional Retirement
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Dimensional is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Canada Fund and Dimensional Retirement Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional Retirement and Fidelity Canada 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 Canada Fund are associated (or correlated) with Dimensional Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional Retirement has no effect on the direction of Fidelity Canada i.e., Fidelity Canada and Dimensional Retirement go up and down completely randomly.
Pair Corralation between Fidelity Canada and Dimensional Retirement
Assuming the 90 days horizon Fidelity Canada Fund is expected to generate 3.38 times more return on investment than Dimensional Retirement. However, Fidelity Canada is 3.38 times more volatile than Dimensional Retirement Income. It trades about 0.11 of its potential returns per unit of risk. Dimensional Retirement Income is currently generating about 0.16 per unit of risk. If you would invest 6,111 in Fidelity Canada Fund on September 2, 2024 and sell it today you would earn a total of 1,378 from holding Fidelity Canada Fund or generate 22.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Canada Fund vs. Dimensional Retirement Income
Performance |
| Timeline |
| Fidelity Canada |
| Dimensional Retirement |
Fidelity Canada and Dimensional Retirement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Canada and Dimensional Retirement
The main advantage of trading using opposite Fidelity Canada and Dimensional Retirement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Canada position performs unexpectedly, Dimensional Retirement 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 Dimensional Retirement will offset losses from the drop in Dimensional Retirement's long position.| Fidelity Canada vs. Dimensional Retirement Income | Fidelity Canada vs. Franklin Lifesmart Retirement | Fidelity Canada vs. Calvert Moderate Allocation | Fidelity Canada vs. Transamerica Cleartrack Retirement |
| Dimensional Retirement vs. Mesirow Financial High | Dimensional Retirement vs. Pace High Yield | Dimensional Retirement vs. Siit High Yield | Dimensional Retirement vs. Western Asset High |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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