Correlation Between Commodities Strategy and Fidelity International
Can any of the company-specific risk be diversified away by investing in both Commodities Strategy and Fidelity 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 Commodities Strategy and Fidelity International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commodities Strategy Fund and Fidelity International Real, you can compare the effects of market volatilities on Commodities Strategy and Fidelity 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 Commodities Strategy with a short position of Fidelity International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commodities Strategy and Fidelity International.
Diversification Opportunities for Commodities Strategy and Fidelity International
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Commodities and Fidelity is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Commodities Strategy Fund and Fidelity International Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity International and Commodities Strategy 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 Commodities Strategy Fund are associated (or correlated) with Fidelity International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity International has no effect on the direction of Commodities Strategy i.e., Commodities Strategy and Fidelity International go up and down completely randomly.
Pair Corralation between Commodities Strategy and Fidelity International
Assuming the 90 days horizon Commodities Strategy Fund is expected to generate 1.4 times more return on investment than Fidelity International. However, Commodities Strategy is 1.4 times more volatile than Fidelity International Real. It trades about 0.2 of its potential returns per unit of risk. Fidelity International Real is currently generating about -0.12 per unit of risk. If you would invest 2,880 in Commodities Strategy Fund on September 15, 2024 and sell it today you would earn a total of 101.00 from holding Commodities Strategy Fund or generate 3.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commodities Strategy Fund vs. Fidelity International Real
Performance |
| Timeline |
| Commodities Strategy |
| Fidelity International |
Commodities Strategy and Fidelity International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commodities Strategy and Fidelity International
The main advantage of trading using opposite Commodities Strategy and Fidelity International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commodities Strategy position performs unexpectedly, Fidelity 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 Fidelity International will offset losses from the drop in Fidelity International's long position.| Commodities Strategy vs. Basic Materials Fund | Commodities Strategy vs. Energy Services Fund | Commodities Strategy vs. Real Estate Fund | Commodities Strategy vs. Precious Metals Fund |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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