Correlation Between Fidelity Europe and Fidelity Climate
Can any of the company-specific risk be diversified away by investing in both Fidelity Europe and Fidelity Climate 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 Climate 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 Climate Action, you can compare the effects of market volatilities on Fidelity Europe and Fidelity Climate 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 Climate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Europe and Fidelity Climate.
Diversification Opportunities for Fidelity Europe and Fidelity Climate
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fidelity and Fidelity is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Europe Fund and Fidelity Climate Action in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Climate Action 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 Climate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Climate Action has no effect on the direction of Fidelity Europe i.e., Fidelity Europe and Fidelity Climate go up and down completely randomly.
Pair Corralation between Fidelity Europe and Fidelity Climate
Assuming the 90 days horizon Fidelity Europe Fund is expected to generate 1.06 times more return on investment than Fidelity Climate. However, Fidelity Europe is 1.06 times more volatile than Fidelity Climate Action. It trades about 0.09 of its potential returns per unit of risk. Fidelity Climate Action is currently generating about 0.03 per unit of risk. If you would invest 3,667 in Fidelity Europe Fund on September 12, 2024 and sell it today you would earn a total of 49.00 from holding Fidelity Europe Fund or generate 1.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Fidelity Europe Fund vs. Fidelity Climate Action
Performance |
| Timeline |
| Fidelity Europe |
| Fidelity Climate Action |
Fidelity Europe and Fidelity Climate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Europe and Fidelity Climate
The main advantage of trading using opposite Fidelity Europe and Fidelity Climate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Europe position performs unexpectedly, Fidelity Climate 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 Climate will offset losses from the drop in Fidelity Climate's long position.| Fidelity Europe vs. Invesco Asia Pacific | Fidelity Europe vs. Invesco European Small | Fidelity Europe vs. Invesco Developing Markets | Fidelity Europe vs. Aquagold International |
| Fidelity Climate vs. American Funds New | Fidelity Climate vs. American Funds New | Fidelity Climate vs. New Perspective Fund | Fidelity Climate vs. New Perspective 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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