Correlation Between Government Securities and Fidelity China
Can any of the company-specific risk be diversified away by investing in both Government Securities 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 Government Securities and Fidelity China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Government Securities Fund and Fidelity China Region, you can compare the effects of market volatilities on Government Securities 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 Government Securities with a short position of Fidelity China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Government Securities and Fidelity China.
Diversification Opportunities for Government Securities and Fidelity China
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Government and Fidelity is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Government Securities Fund 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 Government Securities 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 Government Securities Fund 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 Government Securities i.e., Government Securities and Fidelity China go up and down completely randomly.
Pair Corralation between Government Securities and Fidelity China
Assuming the 90 days horizon Government Securities Fund is expected to generate 0.2 times more return on investment than Fidelity China. However, Government Securities Fund is 4.98 times less risky than Fidelity China. It trades about 0.12 of its potential returns per unit of risk. Fidelity China Region is currently generating about -0.13 per unit of risk. If you would invest 880.00 in Government Securities Fund on September 4, 2024 and sell it today you would earn a total of 6.00 from holding Government Securities Fund or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Government Securities Fund vs. Fidelity China Region
Performance |
| Timeline |
| Government Securities |
| Fidelity China Region |
Government Securities and Fidelity China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Government Securities and Fidelity China
The main advantage of trading using opposite Government Securities and Fidelity China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Government Securities 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.| Government Securities vs. T Rowe Price | Government Securities vs. Versatile Bond Portfolio | Government Securities vs. Multisector Bond Sma | Government Securities vs. Gmo High Yield |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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