Correlation Between Fidelity Worldwide and American Funds
Can any of the company-specific risk be diversified away by investing in both Fidelity Worldwide and American Funds 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 American Funds 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 American Funds New, you can compare the effects of market volatilities on Fidelity Worldwide and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Worldwide and American Funds.
Diversification Opportunities for Fidelity Worldwide and American Funds
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and American is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Worldwide Fund and American Funds New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds New 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds New has no effect on the direction of Fidelity Worldwide i.e., Fidelity Worldwide and American Funds go up and down completely randomly.
Pair Corralation between Fidelity Worldwide and American Funds
Assuming the 90 days horizon Fidelity Worldwide is expected to generate 1.01 times less return on investment than American Funds. In addition to that, Fidelity Worldwide is 1.32 times more volatile than American Funds New. It trades about 0.05 of its total potential returns per unit of risk. American Funds New is currently generating about 0.07 per unit of volatility. If you would invest 6,241 in American Funds New on September 13, 2024 and sell it today you would earn a total of 467.00 from holding American Funds New or generate 7.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Worldwide Fund vs. American Funds New
Performance |
| Timeline |
| Fidelity Worldwide |
| American Funds New |
Fidelity Worldwide and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Worldwide and American Funds
The main advantage of trading using opposite Fidelity Worldwide and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Worldwide position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Fidelity Worldwide vs. Fidelity Pacific Basin | Fidelity Worldwide vs. Fidelity Europe Fund | Fidelity Worldwide vs. Fidelity International Capital | Fidelity Worldwide vs. Fidelity Overseas Fund |
| American Funds vs. Ep Emerging Markets | American Funds vs. Western Asset Diversified | American Funds vs. Barings Emerging Markets | American Funds vs. Ashmore Emerging Markets |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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