Correlation Between Fidelity Worldwide and Fidelity Pacific
Can any of the company-specific risk be diversified away by investing in both Fidelity Worldwide and Fidelity Pacific 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 Fidelity Pacific 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 Fidelity Pacific Basin, you can compare the effects of market volatilities on Fidelity Worldwide and Fidelity Pacific 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 Fidelity Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Worldwide and Fidelity Pacific.
Diversification Opportunities for Fidelity Worldwide and Fidelity Pacific
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Fidelity is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Worldwide Fund and Fidelity Pacific Basin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Pacific Basin 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 Fidelity Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Pacific Basin has no effect on the direction of Fidelity Worldwide i.e., Fidelity Worldwide and Fidelity Pacific go up and down completely randomly.
Pair Corralation between Fidelity Worldwide and Fidelity Pacific
Assuming the 90 days horizon Fidelity Worldwide Fund is expected to generate 0.96 times more return on investment than Fidelity Pacific. However, Fidelity Worldwide Fund is 1.04 times less risky than Fidelity Pacific. It trades about 0.1 of its potential returns per unit of risk. Fidelity Pacific Basin is currently generating about 0.03 per unit of risk. If you would invest 2,934 in Fidelity Worldwide Fund on August 26, 2024 and sell it today you would earn a total of 1,106 from holding Fidelity Worldwide Fund or generate 37.7% 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. Fidelity Pacific Basin
Performance |
| Timeline |
| Fidelity Worldwide |
| Fidelity Pacific Basin |
Fidelity Worldwide and Fidelity Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Worldwide and Fidelity Pacific
The main advantage of trading using opposite Fidelity Worldwide and Fidelity Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Worldwide position performs unexpectedly, Fidelity Pacific 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 Pacific will offset losses from the drop in Fidelity Pacific's 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 |
| Fidelity Pacific vs. Fidelity Europe Fund | Fidelity Pacific vs. Fidelity Japan Fund | Fidelity Pacific vs. Fidelity Emerging Asia | Fidelity Pacific vs. Fidelity Nordic Fund |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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