Correlation Between Fidelity Total and Causeway International
Can any of the company-specific risk be diversified away by investing in both Fidelity Total and Causeway International 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 Total and Causeway International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Total Market and Causeway International Value, you can compare the effects of market volatilities on Fidelity Total and Causeway International 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 Total with a short position of Causeway International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Total and Causeway International.
Diversification Opportunities for Fidelity Total and Causeway International
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fidelity and Causeway is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Total Market and Causeway International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Causeway International and Fidelity Total 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 Total Market are associated (or correlated) with Causeway International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Causeway International has no effect on the direction of Fidelity Total i.e., Fidelity Total and Causeway International go up and down completely randomly.
Pair Corralation between Fidelity Total and Causeway International
Assuming the 90 days horizon Fidelity Total Market is expected to generate 1.1 times more return on investment than Causeway International. However, Fidelity Total is 1.1 times more volatile than Causeway International Value. It trades about 0.22 of its potential returns per unit of risk. Causeway International Value is currently generating about -0.27 per unit of risk. If you would invest 16,059 in Fidelity Total Market on August 29, 2024 and sell it today you would earn a total of 707.00 from holding Fidelity Total Market or generate 4.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Total Market vs. Causeway International Value
Performance |
| Timeline |
| Fidelity Total Market |
| Causeway International |
Fidelity Total and Causeway International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Total and Causeway International
The main advantage of trading using opposite Fidelity Total and Causeway International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Total position performs unexpectedly, Causeway International 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 Causeway International will offset losses from the drop in Causeway International's long position.| Fidelity Total vs. Fidelity Zero Total | Fidelity Total vs. Fidelity 500 Index | Fidelity Total vs. Fidelity International Index | Fidelity Total vs. Fidelity Bond Index |
| Causeway International vs. HUMANA INC | Causeway International vs. Aquagold International | Causeway International vs. Barloworld Ltd ADR | Causeway International vs. Morningstar Unconstrained Allocation |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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