Correlation Between Fidelity Extended and Fidelity International
Can any of the company-specific risk be diversified away by investing in both Fidelity Extended and Fidelity 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 Extended and Fidelity International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Extended Market and Fidelity International Index, you can compare the effects of market volatilities on Fidelity Extended and Fidelity 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 Extended with a short position of Fidelity International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Extended and Fidelity International.
Diversification Opportunities for Fidelity Extended and Fidelity International
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fidelity and Fidelity is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Extended Market and Fidelity International Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity International and Fidelity Extended 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 Extended Market are associated (or correlated) with Fidelity International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity International has no effect on the direction of Fidelity Extended i.e., Fidelity Extended and Fidelity International go up and down completely randomly.
Pair Corralation between Fidelity Extended and Fidelity International
Assuming the 90 days horizon Fidelity Extended Market is expected to generate 1.44 times more return on investment than Fidelity International. However, Fidelity Extended is 1.44 times more volatile than Fidelity International Index. It trades about 0.08 of its potential returns per unit of risk. Fidelity International Index is currently generating about 0.06 per unit of risk. If you would invest 6,425 in Fidelity Extended Market on August 29, 2024 and sell it today you would earn a total of 3,444 from holding Fidelity Extended Market or generate 53.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Extended Market vs. Fidelity International Index
Performance |
| Timeline |
| Fidelity Extended Market |
| Fidelity International |
Fidelity Extended and Fidelity International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Extended and Fidelity International
The main advantage of trading using opposite Fidelity Extended and Fidelity International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Extended position performs unexpectedly, Fidelity 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 Fidelity International will offset losses from the drop in Fidelity International's long position.| Fidelity Extended vs. Fidelity International Index | Fidelity Extended vs. Fidelity 500 Index | Fidelity Extended vs. Fidelity Bond Index | Fidelity Extended vs. Fidelity Total Market |
| Fidelity International vs. Fidelity Emerging Markets | Fidelity International vs. Fidelity Small Cap | Fidelity International vs. Fidelity Bond Index | Fidelity International vs. Fidelity Mid Cap |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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