Correlation Between Fidelity Europe and Fidelity Nordic
Can any of the company-specific risk be diversified away by investing in both Fidelity Europe and Fidelity Nordic 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 Nordic 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 Nordic Fund, you can compare the effects of market volatilities on Fidelity Europe and Fidelity Nordic 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 Nordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Europe and Fidelity Nordic.
Diversification Opportunities for Fidelity Europe and Fidelity Nordic
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Fidelity is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Europe Fund and Fidelity Nordic Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Nordic 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 Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Nordic has no effect on the direction of Fidelity Europe i.e., Fidelity Europe and Fidelity Nordic go up and down completely randomly.
Pair Corralation between Fidelity Europe and Fidelity Nordic
Assuming the 90 days horizon Fidelity Europe is expected to generate 1.17 times less return on investment than Fidelity Nordic. But when comparing it to its historical volatility, Fidelity Europe Fund is 1.15 times less risky than Fidelity Nordic. It trades about 0.04 of its potential returns per unit of risk. Fidelity Nordic Fund is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 5,245 in Fidelity Nordic Fund on August 26, 2024 and sell it today you would earn a total of 1,049 from holding Fidelity Nordic Fund or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Europe Fund vs. Fidelity Nordic Fund
Performance |
| Timeline |
| Fidelity Europe |
| Fidelity Nordic |
Fidelity Europe and Fidelity Nordic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Europe and Fidelity Nordic
The main advantage of trading using opposite Fidelity Europe and Fidelity Nordic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Europe position performs unexpectedly, Fidelity Nordic 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 Nordic will offset losses from the drop in Fidelity Nordic's long position.| Fidelity Europe vs. Fidelity Pacific Basin | Fidelity Europe vs. Fidelity Japan Fund | Fidelity Europe vs. Fidelity Investment Trust | Fidelity Europe vs. Fidelity Nordic Fund |
| Fidelity Nordic vs. Fidelity Emerging Asia | Fidelity Nordic vs. Fidelity Emerging Markets | Fidelity Nordic vs. Fidelity China Region | Fidelity Nordic vs. Fidelity Leveraged Pany |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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