Correlation Between Fidelity Pacific and Fidelity China
Can any of the company-specific risk be diversified away by investing in both Fidelity Pacific and Fidelity China 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 Pacific and Fidelity China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Pacific Basin and Fidelity China Region, you can compare the effects of market volatilities on Fidelity Pacific and Fidelity China 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 Pacific with a short position of Fidelity China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Pacific and Fidelity China.
Diversification Opportunities for Fidelity Pacific and Fidelity China
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Fidelity is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Pacific Basin and Fidelity China Region in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity China Region and Fidelity Pacific 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 Pacific Basin are associated (or correlated) with Fidelity China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity China Region has no effect on the direction of Fidelity Pacific i.e., Fidelity Pacific and Fidelity China go up and down completely randomly.
Pair Corralation between Fidelity Pacific and Fidelity China
Assuming the 90 days horizon Fidelity Pacific Basin is expected to under-perform the Fidelity China. But the mutual fund apears to be less risky and, when comparing its historical volatility, Fidelity Pacific Basin is 1.67 times less risky than Fidelity China. The mutual fund trades about -0.15 of its potential returns per unit of risk. The Fidelity China Region is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 4,081 in Fidelity China Region on August 30, 2024 and sell it today you would lose (242.00) from holding Fidelity China Region or give up 5.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Pacific Basin vs. Fidelity China Region
Performance |
| Timeline |
| Fidelity Pacific Basin |
| Fidelity China Region |
Fidelity Pacific and Fidelity China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Pacific and Fidelity China
The main advantage of trading using opposite Fidelity Pacific and Fidelity China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Pacific position performs unexpectedly, Fidelity China 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 China will offset losses from the drop in Fidelity China's long position.| Fidelity Pacific vs. Fidelity Europe Fund | Fidelity Pacific vs. Fidelity Japan Fund | Fidelity Pacific vs. Fidelity Emerging Asia | Fidelity Pacific vs. Fidelity Nordic Fund |
| Fidelity China vs. Fidelity Emerging Asia | Fidelity China vs. Fidelity Emerging Markets | Fidelity China vs. Fidelity Canada Fund | Fidelity China vs. Fidelity Pacific Basin |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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