Correlation Between Fidelity International and Fidelity Dividend
Can any of the company-specific risk be diversified away by investing in both Fidelity International and Fidelity Dividend 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 Dividend 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 Dividend Growth, you can compare the effects of market volatilities on Fidelity International and Fidelity Dividend 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 Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity International and Fidelity Dividend.
Diversification Opportunities for Fidelity International and Fidelity Dividend
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fidelity and Fidelity is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity International Discove and Fidelity Dividend Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Dividend Growth 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 Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Dividend Growth has no effect on the direction of Fidelity International i.e., Fidelity International and Fidelity Dividend go up and down completely randomly.
Pair Corralation between Fidelity International and Fidelity Dividend
Assuming the 90 days horizon Fidelity International Discovery is expected to generate 0.83 times more return on investment than Fidelity Dividend. However, Fidelity International Discovery is 1.2 times less risky than Fidelity Dividend. It trades about 0.03 of its potential returns per unit of risk. Fidelity Dividend Growth is currently generating about 0.02 per unit of risk. If you would invest 4,971 in Fidelity International Discovery on September 14, 2024 and sell it today you would earn a total of 166.00 from holding Fidelity International Discovery or generate 3.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity International Discove vs. Fidelity Dividend Growth
Performance |
| Timeline |
| Fidelity International |
| Fidelity Dividend Growth |
Fidelity International and Fidelity Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity International and Fidelity Dividend
The main advantage of trading using opposite Fidelity International and Fidelity Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity International position performs unexpectedly, Fidelity Dividend 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 Dividend will offset losses from the drop in Fidelity Dividend's long position.The idea behind Fidelity International Discovery and Fidelity Dividend Growth 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 Dividend vs. Fidelity Mid Cap Stock | Fidelity Dividend vs. Fidelity Equity Income Fund | Fidelity Dividend vs. Fidelity Low Priced Stock | Fidelity Dividend vs. Fidelity Diversified International |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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