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 Real and Fidelity Capital Income, 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
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fidelity and Fidelity is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity International Real and Fidelity Capital Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Capital Income 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 Real 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 Income 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 Real is expected to under-perform the Fidelity Capital. In addition to that, Fidelity International is 2.72 times more volatile than Fidelity Capital Income. It trades about -0.14 of its total potential returns per unit of risk. Fidelity Capital Income is currently generating about 0.32 per unit of volatility. If you would invest 1,017 in Fidelity Capital Income on August 30, 2024 and sell it today you would earn a total of 20.00 from holding Fidelity Capital Income or generate 1.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity International Real vs. Fidelity Capital Income
Performance |
| Timeline |
| Fidelity International |
| Fidelity Capital Income |
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 Real and Fidelity Capital Income 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 High Income | Fidelity Capital vs. Fidelity New Markets | Fidelity Capital vs. Fidelity Total Bond | Fidelity Capital vs. Fidelity Balanced Fund |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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