Correlation Between Fidelity Managed and Fidelity Europe
Can any of the company-specific risk be diversified away by investing in both Fidelity Managed and Fidelity Europe 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 Managed and Fidelity Europe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Managed Retirement and Fidelity Europe Fund, you can compare the effects of market volatilities on Fidelity Managed and Fidelity Europe 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 Managed with a short position of Fidelity Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Managed and Fidelity Europe.
Diversification Opportunities for Fidelity Managed and Fidelity Europe
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Managed Retirement and Fidelity Europe Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Europe and Fidelity Managed 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 Managed Retirement are associated (or correlated) with Fidelity Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Europe has no effect on the direction of Fidelity Managed i.e., Fidelity Managed and Fidelity Europe go up and down completely randomly.
Pair Corralation between Fidelity Managed and Fidelity Europe
Assuming the 90 days horizon Fidelity Managed Retirement is expected to generate 0.37 times more return on investment than Fidelity Europe. However, Fidelity Managed Retirement is 2.7 times less risky than Fidelity Europe. It trades about 0.09 of its potential returns per unit of risk. Fidelity Europe Fund is currently generating about -0.13 per unit of risk. If you would invest 5,384 in Fidelity Managed Retirement on August 31, 2024 and sell it today you would earn a total of 32.00 from holding Fidelity Managed Retirement or generate 0.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Managed Retirement vs. Fidelity Europe Fund
Performance |
| Timeline |
| Fidelity Managed Ret |
| Fidelity Europe |
Fidelity Managed and Fidelity Europe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Managed and Fidelity Europe
The main advantage of trading using opposite Fidelity Managed and Fidelity Europe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Managed position performs unexpectedly, Fidelity Europe 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 Europe will offset losses from the drop in Fidelity Europe's long position.| Fidelity Managed vs. Inflation Protected Bond Fund | Fidelity Managed vs. Federated Ohio Municipal | Fidelity Managed vs. Oklahoma Municipal Fund | Fidelity Managed vs. T Rowe Price |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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