Correlation Between Fidelity International and Domini International
Can any of the company-specific risk be diversified away by investing in both Fidelity International and Domini 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 International and Domini International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity International Growth and Domini International Opportunities, you can compare the effects of market volatilities on Fidelity International and Domini 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 International with a short position of Domini International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity International and Domini International.
Diversification Opportunities for Fidelity International and Domini International
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Domini is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity International Growth and Domini International Opportuni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Domini International and Fidelity International 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 International Growth are associated (or correlated) with Domini International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Domini International has no effect on the direction of Fidelity International i.e., Fidelity International and Domini International go up and down completely randomly.
Pair Corralation between Fidelity International and Domini International
Assuming the 90 days horizon Fidelity International Growth is expected to generate 1.04 times more return on investment than Domini International. However, Fidelity International is 1.04 times more volatile than Domini International Opportunities. It trades about 0.06 of its potential returns per unit of risk. Domini International Opportunities is currently generating about 0.04 per unit of risk. If you would invest 1,793 in Fidelity International Growth on September 4, 2024 and sell it today you would earn a total of 310.00 from holding Fidelity International Growth or generate 17.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Fidelity International Growth vs. Domini International Opportuni
Performance |
| Timeline |
| Fidelity International |
| Domini International |
Fidelity International and Domini International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity International and Domini International
The main advantage of trading using opposite Fidelity International and Domini International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity International position performs unexpectedly, Domini 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 Domini International will offset losses from the drop in Domini International's long position.The idea behind Fidelity International Growth and Domini International Opportunities pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Domini International vs. Cornerstone Advisors Real | Domini International vs. Domini Impact International | Domini International vs. Domini Impact Bond | Domini International vs. Domini Impact Equity |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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