Correlation Between Dimensional Retirement and Fidelity Canada
Can any of the company-specific risk be diversified away by investing in both Dimensional Retirement and Fidelity Canada 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 Dimensional Retirement and Fidelity Canada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimensional Retirement Income and Fidelity Canada Fund, you can compare the effects of market volatilities on Dimensional Retirement and Fidelity Canada 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 Dimensional Retirement with a short position of Fidelity Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional Retirement and Fidelity Canada.
Diversification Opportunities for Dimensional Retirement and Fidelity Canada
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dimensional and Fidelity is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional Retirement Income and Fidelity Canada Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Canada and Dimensional Retirement 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 Dimensional Retirement Income are associated (or correlated) with Fidelity Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Canada has no effect on the direction of Dimensional Retirement i.e., Dimensional Retirement and Fidelity Canada go up and down completely randomly.
Pair Corralation between Dimensional Retirement and Fidelity Canada
Assuming the 90 days horizon Dimensional Retirement is expected to generate 3.65 times less return on investment than Fidelity Canada. But when comparing it to its historical volatility, Dimensional Retirement Income is 3.16 times less risky than Fidelity Canada. It trades about 0.33 of its potential returns per unit of risk. Fidelity Canada Fund is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 7,122 in Fidelity Canada Fund on September 2, 2024 and sell it today you would earn a total of 367.00 from holding Fidelity Canada Fund or generate 5.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimensional Retirement Income vs. Fidelity Canada Fund
Performance |
| Timeline |
| Dimensional Retirement |
| Fidelity Canada |
Dimensional Retirement and Fidelity Canada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional Retirement and Fidelity Canada
The main advantage of trading using opposite Dimensional Retirement and Fidelity Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional Retirement position performs unexpectedly, Fidelity Canada 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 Canada will offset losses from the drop in Fidelity Canada's long position.| Dimensional Retirement vs. Mesirow Financial High | Dimensional Retirement vs. Pace High Yield | Dimensional Retirement vs. Siit High Yield | Dimensional Retirement vs. Western Asset High |
| Fidelity Canada vs. Dimensional Retirement Income | Fidelity Canada vs. Franklin Lifesmart Retirement | Fidelity Canada vs. Calvert Moderate Allocation | Fidelity Canada vs. Transamerica Cleartrack Retirement |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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