Correlation Between Fidelity Worldwide and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Fidelity Worldwide and Emerging Markets 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 Worldwide and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Worldwide Fund and Emerging Markets Fund, you can compare the effects of market volatilities on Fidelity Worldwide and Emerging Markets 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 Worldwide with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Worldwide and Emerging Markets.
Diversification Opportunities for Fidelity Worldwide and Emerging Markets
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Emerging is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Worldwide Fund and Emerging Markets Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets and Fidelity Worldwide 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 Worldwide Fund are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets has no effect on the direction of Fidelity Worldwide i.e., Fidelity Worldwide and Emerging Markets go up and down completely randomly.
Pair Corralation between Fidelity Worldwide and Emerging Markets
Assuming the 90 days horizon Fidelity Worldwide Fund is expected to generate 1.11 times more return on investment than Emerging Markets. However, Fidelity Worldwide is 1.11 times more volatile than Emerging Markets Fund. It trades about 0.13 of its potential returns per unit of risk. Emerging Markets Fund is currently generating about -0.14 per unit of risk. If you would invest 3,841 in Fidelity Worldwide Fund on August 25, 2024 and sell it today you would earn a total of 100.00 from holding Fidelity Worldwide Fund or generate 2.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Worldwide Fund vs. Emerging Markets Fund
Performance |
| Timeline |
| Fidelity Worldwide |
| Emerging Markets |
Fidelity Worldwide and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Worldwide and Emerging Markets
The main advantage of trading using opposite Fidelity Worldwide and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Worldwide position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Fidelity Worldwide vs. Emerging Markets Fund | Fidelity Worldwide vs. International Growth Fund | Fidelity Worldwide vs. Heritage Fund Investor | Fidelity Worldwide vs. Select Fund Investor |
| Emerging Markets vs. Heritage Fund Investor | Emerging Markets vs. Real Estate Fund | Emerging Markets vs. Global Growth Fund | Emerging Markets vs. Utilities Fund Investor |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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