Correlation Between Fidelity Europe and Fidelity Emerging
Can any of the company-specific risk be diversified away by investing in both Fidelity Europe and Fidelity Emerging 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 Emerging 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 Emerging Asia, you can compare the effects of market volatilities on Fidelity Europe and Fidelity Emerging 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 Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Europe and Fidelity Emerging.
Diversification Opportunities for Fidelity Europe and Fidelity Emerging
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fidelity and Fidelity is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Europe Fund and Fidelity Emerging Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Emerging Asia 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 Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Emerging Asia has no effect on the direction of Fidelity Europe i.e., Fidelity Europe and Fidelity Emerging go up and down completely randomly.
Pair Corralation between Fidelity Europe and Fidelity Emerging
Assuming the 90 days horizon Fidelity Europe Fund is expected to under-perform the Fidelity Emerging. But the mutual fund apears to be less risky and, when comparing its historical volatility, Fidelity Europe Fund is 1.27 times less risky than Fidelity Emerging. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Fidelity Emerging Asia is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 4,968 in Fidelity Emerging Asia on September 1, 2024 and sell it today you would earn a total of 19.00 from holding Fidelity Emerging Asia or generate 0.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Europe Fund vs. Fidelity Emerging Asia
Performance |
| Timeline |
| Fidelity Europe |
| Fidelity Emerging Asia |
Fidelity Europe and Fidelity Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Europe and Fidelity Emerging
The main advantage of trading using opposite Fidelity Europe and Fidelity Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Europe position performs unexpectedly, Fidelity Emerging 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 Emerging will offset losses from the drop in Fidelity Emerging'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 Emerging vs. Fidelity China Region | Fidelity Emerging vs. Fidelity Emerging Markets | Fidelity Emerging vs. Fidelity Canada Fund | Fidelity Emerging vs. Fidelity Pacific Basin |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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