Correlation Between Fidelity Canada and Fidelity Emerging
Can any of the company-specific risk be diversified away by investing in both Fidelity Canada and Fidelity Emerging 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 Canada and Fidelity Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Canada Fund and Fidelity Emerging Asia, you can compare the effects of market volatilities on Fidelity Canada and Fidelity Emerging 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 Canada with a short position of Fidelity Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Canada and Fidelity Emerging.
Diversification Opportunities for Fidelity Canada and Fidelity Emerging
0.67 | Correlation Coefficient |
Poor 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 Canada Fund and Fidelity Emerging Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Emerging Asia and Fidelity Canada 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 Canada Fund are associated (or correlated) with Fidelity Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Emerging Asia has no effect on the direction of Fidelity Canada i.e., Fidelity Canada and Fidelity Emerging go up and down completely randomly.
Pair Corralation between Fidelity Canada and Fidelity Emerging
Assuming the 90 days horizon Fidelity Canada Fund is expected to generate 0.59 times more return on investment than Fidelity Emerging. However, Fidelity Canada Fund is 1.7 times less risky than Fidelity Emerging. It trades about 0.31 of its potential returns per unit of risk. Fidelity Emerging Asia is currently generating about 0.02 per unit of risk. If you would invest 7,084 in Fidelity Canada Fund on September 5, 2024 and sell it today you would earn a total of 302.00 from holding Fidelity Canada Fund or generate 4.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Canada Fund vs. Fidelity Emerging Asia
Performance |
| Timeline |
| Fidelity Canada |
| Fidelity Emerging Asia |
Fidelity Canada and Fidelity Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Canada and Fidelity Emerging
The main advantage of trading using opposite Fidelity Canada and Fidelity Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Canada position performs unexpectedly, Fidelity Emerging 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 Emerging will offset losses from the drop in Fidelity Emerging's long position.| Fidelity Canada vs. Fidelity Emerging Asia | Fidelity Canada vs. Fidelity Emerging Markets | Fidelity Canada vs. Fidelity China Region | Fidelity Canada vs. Fidelity Leveraged Pany |
| Fidelity Emerging vs. Fidelity China Region | Fidelity Emerging vs. Fidelity Emerging Markets | Fidelity Emerging vs. Fidelity Canada Fund | Fidelity Emerging 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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