Correlation Between Fidelity Canadian and Global Healthcare

Can any of the company-specific risk be diversified away by investing in both Fidelity Canadian and Global Healthcare 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 Fidelity Canadian and Global Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fidelity Canadian Growth and Global Healthcare Income, you can compare the effects of market volatilities on Fidelity Canadian and Global Healthcare 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 Fidelity Canadian with a short position of Global Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Canadian and Global Healthcare.

Diversification Opportunities for Fidelity Canadian and Global Healthcare

-0.87

Correlation Coefficient

Fidelity Canadian  Global Healthcare

Pay attention - limited upside

The 3 months correlation between Fidelity and Global is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Canadian Growth and Global Healthcare Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Healthcare Income and Fidelity Canadian 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 Fidelity Canadian Growth are associated (or correlated) with Global Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Healthcare Income has no effect on the direction of Fidelity Canadian i.e., Fidelity Canadian and Global Healthcare go up and down completely randomly.

Pair Corralation between Fidelity Canadian and Global Healthcare

Assuming the 90 days trading horizon Fidelity Canadian Growth is expected to generate 0.71 times more return on investment than Global Healthcare. However, Fidelity Canadian Growth is 1.4 times less risky than Global Healthcare. It trades about 0.3 of its potential returns per unit of risk. Global Healthcare Income is currently generating about -0.11 per unit of risk. If you would invest  11,602  in Fidelity Canadian Growth on August 31, 2024 and sell it today you would earn a total of  1,497  from holding Fidelity Canadian Growth or generate 12.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Fidelity Canadian Growth  vs.  Global Healthcare Income

Fidelity Canadian Growth

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Canadian Growth are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat unfluctuating basic indicators, Fidelity Canadian may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Global Healthcare Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Healthcare Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy technical and fundamental indicators, Global Healthcare is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Fidelity Canadian and Global Healthcare

The main advantage of trading using opposite Fidelity Canadian and Global Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Canadian position performs unexpectedly, Global Healthcare 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 Global Healthcare will offset losses from the drop in Global Healthcare's long position.

The idea behind Fidelity Canadian Growth and Global Healthcare Income pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.