Correlation Between Fidelity LongShort and RBC Discount
Can any of the company-specific risk be diversified away by investing in both Fidelity LongShort and RBC Discount 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 LongShort and RBC Discount into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity LongShort Alternative and RBC Discount Bond, you can compare the effects of market volatilities on Fidelity LongShort and RBC Discount 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 LongShort with a short position of RBC Discount. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity LongShort and RBC Discount.
Diversification Opportunities for Fidelity LongShort and RBC Discount
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and RBC is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity LongShort Alternative and RBC Discount Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Discount Bond and Fidelity LongShort 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 LongShort Alternative are associated (or correlated) with RBC Discount. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Discount Bond has no effect on the direction of Fidelity LongShort i.e., Fidelity LongShort and RBC Discount go up and down completely randomly.
Pair Corralation between Fidelity LongShort and RBC Discount
Assuming the 90 days trading horizon Fidelity LongShort Alternative is expected to generate 1.67 times more return on investment than RBC Discount. However, Fidelity LongShort is 1.67 times more volatile than RBC Discount Bond. It trades about 0.14 of its potential returns per unit of risk. RBC Discount Bond is currently generating about 0.08 per unit of risk. If you would invest 1,012 in Fidelity LongShort Alternative on August 26, 2024 and sell it today you would earn a total of 162.00 from holding Fidelity LongShort Alternative or generate 16.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 53.28% |
| Values | Daily Returns |
Fidelity LongShort Alternative vs. RBC Discount Bond
Performance |
| Timeline |
| Fidelity LongShort |
| RBC Discount Bond |
Fidelity LongShort and RBC Discount Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity LongShort and RBC Discount
The main advantage of trading using opposite Fidelity LongShort and RBC Discount positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity LongShort position performs unexpectedly, RBC Discount 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 RBC Discount will offset losses from the drop in RBC Discount's long position.| Fidelity LongShort vs. Fidelity Global Value | Fidelity LongShort vs. Fidelity Momentum ETF | Fidelity LongShort vs. Fidelity Canadian High | Fidelity LongShort vs. Fidelity All in One Balanced |
| RBC Discount vs. Franklin Global Aggregate | RBC Discount vs. CI Enhanced Government | RBC Discount vs. PIMCO Global Short | RBC Discount vs. CIBC Core Plus |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Stocks Directory Find actively traded stocks across global markets | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |