Correlation Between Fidelity International and Fidelity Capital
Can any of the company-specific risk be diversified away by investing in both Fidelity International and Fidelity Capital 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 Fidelity Capital 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 Fidelity Capital Appreciation, you can compare the effects of market volatilities on Fidelity International and Fidelity Capital 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 Fidelity Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity International and Fidelity Capital.
Diversification Opportunities for Fidelity International and Fidelity Capital
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity International Discove and Fidelity Capital Appreciation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Capital App 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 Fidelity Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Capital App has no effect on the direction of Fidelity International i.e., Fidelity International and Fidelity Capital go up and down completely randomly.
Pair Corralation between Fidelity International and Fidelity Capital
Assuming the 90 days horizon Fidelity International Discovery is expected to generate 0.86 times more return on investment than Fidelity Capital. However, Fidelity International Discovery is 1.16 times less risky than Fidelity Capital. It trades about 0.25 of its potential returns per unit of risk. Fidelity Capital Appreciation is currently generating about 0.19 per unit of risk. If you would invest 4,829 in Fidelity International Discovery on October 26, 2024 and sell it today you would earn a total of 180.00 from holding Fidelity International Discovery or generate 3.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity International Discove vs. Fidelity Capital Appreciation
Performance |
| Timeline |
| Fidelity International |
| Fidelity Capital App |
Fidelity International and Fidelity Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity International and Fidelity Capital
The main advantage of trading using opposite Fidelity International and Fidelity Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity International position performs unexpectedly, Fidelity Capital 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 Capital will offset losses from the drop in Fidelity Capital's long position.The idea behind Fidelity International Discovery and Fidelity Capital Appreciation 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.
| Fidelity Capital vs. Fidelity Value Fund | Fidelity Capital vs. Fidelity International Discovery | Fidelity Capital vs. Fidelity Dividend Growth | Fidelity Capital vs. Fidelity Mid Cap Stock |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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