Correlation Between Fidelity Series and Eafe Choice
Can any of the company-specific risk be diversified away by investing in both Fidelity Series and Eafe Choice 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 Series and Eafe Choice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Series 1000 and The Eafe Choice, you can compare the effects of market volatilities on Fidelity Series and Eafe Choice 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 Series with a short position of Eafe Choice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Series and Eafe Choice.
Diversification Opportunities for Fidelity Series and Eafe Choice
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and EAFE is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Series 1000 and The Eafe Choice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eafe Choice and Fidelity Series 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 Series 1000 are associated (or correlated) with Eafe Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eafe Choice has no effect on the direction of Fidelity Series i.e., Fidelity Series and Eafe Choice go up and down completely randomly.
Pair Corralation between Fidelity Series and Eafe Choice
Assuming the 90 days horizon Fidelity Series 1000 is expected to under-perform the Eafe Choice. But the mutual fund apears to be less risky and, when comparing its historical volatility, Fidelity Series 1000 is 1.52 times less risky than Eafe Choice. The mutual fund trades about -0.04 of its potential returns per unit of risk. The The Eafe Choice is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,464 in The Eafe Choice on November 29, 2024 and sell it today you would earn a total of 33.00 from holding The Eafe Choice or generate 2.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Series 1000 vs. The Eafe Choice
Performance |
| Timeline |
| Fidelity Series 1000 |
| Eafe Choice |
Fidelity Series and Eafe Choice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Series and Eafe Choice
The main advantage of trading using opposite Fidelity Series and Eafe Choice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Series position performs unexpectedly, Eafe Choice 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 Eafe Choice will offset losses from the drop in Eafe Choice's long position.| Fidelity Series vs. Us Global Investors | Fidelity Series vs. Dreyfusstandish Global Fixed | Fidelity Series vs. Wisdomtree Siegel Global | Fidelity Series vs. Morningstar Global Income |
| Eafe Choice vs. Hartford Moderate Allocation | Eafe Choice vs. Blackrock Moderate Prepared | Eafe Choice vs. College Retirement Equities | Eafe Choice vs. Franklin Lifesmart Retirement |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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