Correlation Between Fidelity Emerging and Fidelity Contrafund
Can any of the company-specific risk be diversified away by investing in both Fidelity Emerging and Fidelity Contrafund 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 Emerging and Fidelity Contrafund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Emerging Asia and Fidelity Contrafund, you can compare the effects of market volatilities on Fidelity Emerging and Fidelity Contrafund 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 Emerging with a short position of Fidelity Contrafund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Emerging and Fidelity Contrafund.
Diversification Opportunities for Fidelity Emerging and Fidelity Contrafund
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Emerging Asia and Fidelity Contrafund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Contrafund and Fidelity Emerging 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 Emerging Asia are associated (or correlated) with Fidelity Contrafund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Contrafund has no effect on the direction of Fidelity Emerging i.e., Fidelity Emerging and Fidelity Contrafund go up and down completely randomly.
Pair Corralation between Fidelity Emerging and Fidelity Contrafund
Assuming the 90 days horizon Fidelity Emerging Asia is expected to generate 1.46 times more return on investment than Fidelity Contrafund. However, Fidelity Emerging is 1.46 times more volatile than Fidelity Contrafund. It trades about 0.18 of its potential returns per unit of risk. Fidelity Contrafund is currently generating about 0.16 per unit of risk. If you would invest 4,362 in Fidelity Emerging Asia on August 31, 2024 and sell it today you would earn a total of 625.00 from holding Fidelity Emerging Asia or generate 14.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Emerging Asia vs. Fidelity Contrafund
Performance |
| Timeline |
| Fidelity Emerging Asia |
| Fidelity Contrafund |
Fidelity Emerging and Fidelity Contrafund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Emerging and Fidelity Contrafund
The main advantage of trading using opposite Fidelity Emerging and Fidelity Contrafund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Emerging position performs unexpectedly, Fidelity Contrafund 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 Contrafund will offset losses from the drop in Fidelity Contrafund's long position.| Fidelity Emerging vs. Fidelity Emerging Markets | Fidelity Emerging vs. Fidelity Canada Fund | Fidelity Emerging vs. Fidelity Pacific Basin |
| Fidelity Contrafund vs. Fidelity Low Priced Stock | Fidelity Contrafund vs. Fidelity Growth Pany | Fidelity Contrafund vs. Fidelity Magellan Fund | Fidelity Contrafund vs. Fidelity Diversified International |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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