Correlation Between Us Government and Fidelity Canada
Can any of the company-specific risk be diversified away by investing in both Us Government 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 Us Government and Fidelity Canada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Us Government Securities and Fidelity Canada Fund, you can compare the effects of market volatilities on Us Government 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 Us Government with a short position of Fidelity Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Government and Fidelity Canada.
Diversification Opportunities for Us Government and Fidelity Canada
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between USGFX and Fidelity is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Us Government Securities and Fidelity Canada Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Canada and Us Government 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 Us Government Securities 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 Us Government i.e., Us Government and Fidelity Canada go up and down completely randomly.
Pair Corralation between Us Government and Fidelity Canada
Assuming the 90 days horizon Us Government is expected to generate 11.58 times less return on investment than Fidelity Canada. But when comparing it to its historical volatility, Us Government Securities is 1.95 times less risky than Fidelity Canada. It trades about 0.06 of its potential returns per unit of risk. Fidelity Canada Fund is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 7,062 in Fidelity Canada Fund on September 1, 2024 and sell it today you would earn a total of 375.00 from holding Fidelity Canada Fund or generate 5.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Us Government Securities vs. Fidelity Canada Fund
Performance |
| Timeline |
| Us Government Securities |
| Fidelity Canada |
Us Government and Fidelity Canada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Us Government and Fidelity Canada
The main advantage of trading using opposite Us Government and Fidelity Canada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Government 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.| Us Government vs. Government Securities Fund | Us Government vs. John Hancock Government | Us Government vs. Short Term Government Fund | Us Government vs. Blackrock Government Bond |
| Fidelity Canada vs. Fidelity Freedom 2015 | Fidelity Canada vs. Fidelity Puritan Fund | Fidelity Canada vs. Fidelity Puritan Fund | Fidelity Canada 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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