Correlation Between Fidelity Series and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Fidelity Series and Emerging Markets 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 Emerging Markets 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 Emerging Markets Equity, you can compare the effects of market volatilities on Fidelity Series and Emerging Markets 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 Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Series and Emerging Markets.
Diversification Opportunities for Fidelity Series and Emerging Markets
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fidelity and Emerging is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Series 1000 and Emerging Markets Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Equity 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 Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Equity has no effect on the direction of Fidelity Series i.e., Fidelity Series and Emerging Markets go up and down completely randomly.
Pair Corralation between Fidelity Series and Emerging Markets
Assuming the 90 days horizon Fidelity Series 1000 is expected to under-perform the Emerging Markets. In addition to that, Fidelity Series is 1.22 times more volatile than Emerging Markets Equity. It trades about -0.21 of its total potential returns per unit of risk. Emerging Markets Equity is currently generating about -0.07 per unit of volatility. If you would invest 1,401 in Emerging Markets Equity on September 13, 2024 and sell it today you would lose (15.00) from holding Emerging Markets Equity or give up 1.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Series 1000 vs. Emerging Markets Equity
Performance |
| Timeline |
| Fidelity Series 1000 |
| Emerging Markets Equity |
Fidelity Series and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Series and Emerging Markets
The main advantage of trading using opposite Fidelity Series and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Series position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Fidelity Series vs. Balanced Fund Investor | Fidelity Series vs. Small Cap Stock | Fidelity Series vs. Issachar Fund Class | Fidelity Series vs. Rbb Fund |
| Emerging Markets vs. Smallcap Growth Fund | Emerging Markets vs. L Abbett Growth | Emerging Markets vs. Franklin Growth Opportunities | Emerging Markets vs. Praxis Growth Index |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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