Correlation Between Xtrackers Low and Fidelity High
Can any of the company-specific risk be diversified away by investing in both Xtrackers Low and Fidelity High 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 Xtrackers Low and Fidelity High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers Low Beta and Fidelity High Yield, you can compare the effects of market volatilities on Xtrackers Low and Fidelity High 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 Xtrackers Low with a short position of Fidelity High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers Low and Fidelity High.
Diversification Opportunities for Xtrackers Low and Fidelity High
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xtrackers and Fidelity is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers Low Beta and Fidelity High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity High Yield and Xtrackers Low 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 Xtrackers Low Beta are associated (or correlated) with Fidelity High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity High Yield has no effect on the direction of Xtrackers Low i.e., Xtrackers Low and Fidelity High go up and down completely randomly.
Pair Corralation between Xtrackers Low and Fidelity High
Given the investment horizon of 90 days Xtrackers Low is expected to generate 1.24 times less return on investment than Fidelity High. But when comparing it to its historical volatility, Xtrackers Low Beta is 1.09 times less risky than Fidelity High. It trades about 0.11 of its potential returns per unit of risk. Fidelity High Yield is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,215 in Fidelity High Yield on August 31, 2024 and sell it today you would earn a total of 670.00 from holding Fidelity High Yield or generate 15.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers Low Beta vs. Fidelity High Yield
Performance |
| Timeline |
| Xtrackers Low Beta |
| Fidelity High Yield |
Xtrackers Low and Fidelity High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers Low and Fidelity High
The main advantage of trading using opposite Xtrackers Low and Fidelity High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers Low position performs unexpectedly, Fidelity High 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 High will offset losses from the drop in Fidelity High's long position.| Xtrackers Low vs. Xtrackers High Beta | Xtrackers Low vs. Xtrackers Short Duration | Xtrackers Low vs. Goldman Sachs Access | Xtrackers Low vs. FlexShares High Yield |
| Fidelity High vs. Fidelity Corporate Bond | Fidelity High vs. Fidelity Total Bond | Fidelity High vs. Fidelity Dividend ETF | Fidelity High vs. Fidelity Limited Term |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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