Correlation Between Fidelity International and Fidelity Emerging

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Can any of the company-specific risk be diversified away by investing in both Fidelity International and Fidelity Emerging 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 Emerging 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 Emerging Markets, you can compare the effects of market volatilities on Fidelity International and Fidelity Emerging 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 Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity International and Fidelity Emerging.

Diversification Opportunities for Fidelity International and Fidelity Emerging

0.11
  Correlation Coefficient

Average diversification

The 3 months correlation between Fidelity and Fidelity is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity International Real and Fidelity Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Emerging Markets 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 Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Emerging Markets has no effect on the direction of Fidelity International i.e., Fidelity International and Fidelity Emerging go up and down completely randomly.

Pair Corralation between Fidelity International and Fidelity Emerging

Assuming the 90 days horizon Fidelity International Real is expected to generate 0.9 times more return on investment than Fidelity Emerging. However, Fidelity International Real is 1.11 times less risky than Fidelity Emerging. It trades about -0.09 of its potential returns per unit of risk. Fidelity Emerging Markets is currently generating about -0.21 per unit of risk. If you would invest  964.00  in Fidelity International Real on September 3, 2024 and sell it today you would lose (13.00) from holding Fidelity International Real or give up 1.35% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Fidelity International Real  vs.  Fidelity Emerging Markets

 Performance 
       Timeline  
Fidelity International 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Fidelity International Real has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Fidelity International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Fidelity Emerging Markets 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Emerging Markets are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, Fidelity Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity International and Fidelity Emerging Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fidelity International and Fidelity Emerging

The main advantage of trading using opposite Fidelity International and Fidelity Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity International position performs unexpectedly, Fidelity Emerging 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 Emerging will offset losses from the drop in Fidelity Emerging's long position.
The idea behind Fidelity International Real and Fidelity Emerging Markets 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.
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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