Correlation Between Kopernik International and Fidelity New
Can any of the company-specific risk be diversified away by investing in both Kopernik International 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 Kopernik International and Fidelity New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kopernik International and Fidelity New Markets, you can compare the effects of market volatilities on Kopernik International 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 Kopernik International with a short position of Fidelity New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kopernik International and Fidelity New.
Diversification Opportunities for Kopernik International and Fidelity New
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Kopernik and Fidelity is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Kopernik International 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 Kopernik 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 Kopernik International 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 Kopernik International i.e., Kopernik International and Fidelity New go up and down completely randomly.
Pair Corralation between Kopernik International and Fidelity New
Assuming the 90 days horizon Kopernik International is expected to generate 56.56 times less return on investment than Fidelity New. In addition to that, Kopernik International is 1.79 times more volatile than Fidelity New Markets. It trades about 0.0 of its total potential returns per unit of risk. Fidelity New Markets is currently generating about 0.13 per unit of volatility. If you would invest 1,069 in Fidelity New Markets on September 2, 2024 and sell it today you would earn a total of 219.00 from holding Fidelity New Markets or generate 20.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kopernik International vs. Fidelity New Markets
Performance |
| Timeline |
| Kopernik International |
| Fidelity New Markets |
Kopernik International and Fidelity New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kopernik International and Fidelity New
The main advantage of trading using opposite Kopernik International and Fidelity New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kopernik International 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.The idea behind Kopernik International and Fidelity New Markets 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.
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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