Correlation Between Federated Emerging and Fidelity New
Can any of the company-specific risk be diversified away by investing in both Federated Emerging and Fidelity New 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 Federated Emerging and Fidelity New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Emerging Market and Fidelity New Markets, you can compare the effects of market volatilities on Federated Emerging and Fidelity New 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 Federated Emerging with a short position of Fidelity New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Emerging and Fidelity New.
Diversification Opportunities for Federated Emerging and Fidelity New
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FEDERATED and Fidelity is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Federated Emerging Market and Fidelity New Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity New Markets and Federated Emerging 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 Federated Emerging Market are associated (or correlated) with Fidelity New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity New Markets has no effect on the direction of Federated Emerging i.e., Federated Emerging and Fidelity New go up and down completely randomly.
Pair Corralation between Federated Emerging and Fidelity New
Assuming the 90 days horizon Federated Emerging Market is expected to under-perform the Fidelity New. But the mutual fund apears to be less risky and, when comparing its historical volatility, Federated Emerging Market is 1.15 times less risky than Fidelity New. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Fidelity New Markets is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 1,298 in Fidelity New Markets on August 29, 2024 and sell it today you would lose (17.00) from holding Fidelity New Markets or give up 1.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.67% |
| Values | Daily Returns |
Federated Emerging Market vs. Fidelity New Markets
Performance |
| Timeline |
| Federated Emerging Market |
| Fidelity New Markets |
Federated Emerging and Fidelity New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Emerging and Fidelity New
The main advantage of trading using opposite Federated Emerging and Fidelity New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Emerging position performs unexpectedly, Fidelity New 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 New will offset losses from the drop in Fidelity New's long position.| Federated Emerging vs. Fidelity New Markets | Federated Emerging vs. HUMANA INC | Federated Emerging vs. Aquagold International | Federated Emerging vs. Barloworld Ltd ADR |
| Fidelity New vs. HUMANA INC | Fidelity New vs. Aquagold International | Fidelity New vs. Barloworld Ltd ADR | Fidelity New vs. Morningstar Unconstrained Allocation |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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