Correlation Between Nasdaq-100(r) and Fidelity China
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100(r) and Fidelity China 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 Nasdaq-100(r) and Fidelity China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 2x Strategy and Fidelity China Region, you can compare the effects of market volatilities on Nasdaq-100(r) and Fidelity China 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 Nasdaq-100(r) with a short position of Fidelity China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Fidelity China.
Diversification Opportunities for Nasdaq-100(r) and Fidelity China
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nasdaq-100(r) and Fidelity is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy and Fidelity China Region in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity China Region and Nasdaq-100(r) 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 Nasdaq 100 2x Strategy are associated (or correlated) with Fidelity China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity China Region has no effect on the direction of Nasdaq-100(r) i.e., Nasdaq-100(r) and Fidelity China go up and down completely randomly.
Pair Corralation between Nasdaq-100(r) and Fidelity China
Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to generate 1.43 times more return on investment than Fidelity China. However, Nasdaq-100(r) is 1.43 times more volatile than Fidelity China Region. It trades about 0.24 of its potential returns per unit of risk. Fidelity China Region is currently generating about -0.12 per unit of risk. If you would invest 52,764 in Nasdaq 100 2x Strategy on September 1, 2024 and sell it today you would earn a total of 5,297 from holding Nasdaq 100 2x Strategy or generate 10.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Nasdaq 100 2x Strategy vs. Fidelity China Region
Performance |
| Timeline |
| Nasdaq 100 2x |
| Fidelity China Region |
Nasdaq-100(r) and Fidelity China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100(r) and Fidelity China
The main advantage of trading using opposite Nasdaq-100(r) and Fidelity China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) position performs unexpectedly, Fidelity China 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 China will offset losses from the drop in Fidelity China's long position.| Nasdaq-100(r) vs. Nasdaq 100 2x Strategy | Nasdaq-100(r) vs. Direxion Monthly Nasdaq 100 | Nasdaq-100(r) vs. Ultranasdaq 100 Profund Ultranasdaq 100 | Nasdaq-100(r) vs. Nasdaq 100 2x Strategy |
| Fidelity China vs. Fidelity Freedom 2015 | Fidelity China vs. Fidelity Puritan Fund | Fidelity China vs. Fidelity Puritan Fund | Fidelity China vs. Fidelity Pennsylvania Municipal |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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