Correlation Between Xtrackers USD and Fidelity Sustainable
Can any of the company-specific risk be diversified away by investing in both Xtrackers USD and Fidelity Sustainable 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 USD and Fidelity Sustainable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers USD High and Fidelity Sustainable High, you can compare the effects of market volatilities on Xtrackers USD and Fidelity Sustainable 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 USD with a short position of Fidelity Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers USD and Fidelity Sustainable.
Diversification Opportunities for Xtrackers USD and Fidelity Sustainable
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Xtrackers and Fidelity is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers USD High and Fidelity Sustainable High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Sustainable High and Xtrackers USD 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 USD High are associated (or correlated) with Fidelity Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Sustainable High has no effect on the direction of Xtrackers USD i.e., Xtrackers USD and Fidelity Sustainable go up and down completely randomly.
Pair Corralation between Xtrackers USD and Fidelity Sustainable
Given the investment horizon of 90 days Xtrackers USD High is expected to generate 1.0 times more return on investment than Fidelity Sustainable. However, Xtrackers USD High is 1.0 times less risky than Fidelity Sustainable. It trades about 0.15 of its potential returns per unit of risk. Fidelity Sustainable High is currently generating about 0.12 per unit of risk. If you would invest 3,630 in Xtrackers USD High on August 29, 2024 and sell it today you would earn a total of 27.00 from holding Xtrackers USD High or generate 0.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers USD High vs. Fidelity Sustainable High
Performance |
| Timeline |
| Xtrackers USD High |
| Fidelity Sustainable High |
Xtrackers USD and Fidelity Sustainable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers USD and Fidelity Sustainable
The main advantage of trading using opposite Xtrackers USD and Fidelity Sustainable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers USD position performs unexpectedly, Fidelity Sustainable 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 Sustainable will offset losses from the drop in Fidelity Sustainable's long position.| Xtrackers USD vs. SPDR Bloomberg Emerging | Xtrackers USD vs. iShares Broad USD | Xtrackers USD vs. SPDR Barclays Intermediate | Xtrackers USD vs. Schwab Intermediate Term Treasury |
| Fidelity Sustainable vs. Fidelity Preferred Securities | Fidelity Sustainable vs. Fidelity Investment Grade | Fidelity Sustainable vs. Fidelity Investment Grade | Fidelity Sustainable vs. Fidelity High Yield |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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