Correlation Between Fidelity ClearPath and Fidelity Global

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

By analyzing existing cross correlation between Fidelity ClearPath 2045 and Fidelity Global Innovators, you can compare the effects of market volatilities on Fidelity ClearPath and Fidelity Global 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 ClearPath with a short position of Fidelity Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity ClearPath and Fidelity Global.

Diversification Opportunities for Fidelity ClearPath and Fidelity Global

0.26

Correlation Coefficient

Fidelity ClearPath  Fidelity Global

Modest diversification

The 3 months correlation between Fidelity and Fidelity is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity ClearPath 2045 and Fidelity Global Innovators in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Global Inno and Fidelity ClearPath 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 ClearPath 2045 are associated (or correlated) with Fidelity Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Global Inno has no effect on the direction of Fidelity ClearPath i.e., Fidelity ClearPath and Fidelity Global go up and down completely randomly.

Pair Corralation between Fidelity ClearPath and Fidelity Global

Assuming the 90 days trading horizon Fidelity ClearPath 2045 is expected to under-perform the Fidelity Global. But the fund apears to be less risky and, when comparing its historical volatility, Fidelity ClearPath 2045 is 1.21 times less risky than Fidelity Global. The fund trades about -0.08 of its potential returns per unit of risk. The Fidelity Global Innovators is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  3,734  in Fidelity Global Innovators on October 9, 2024 and sell it today you would earn a total of  500.00  from holding Fidelity Global Innovators or generate 13.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Fidelity ClearPath 2045  vs.  Fidelity Global Innovators

Fidelity ClearPath 2045

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity ClearPath 2045 has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Fidelity ClearPath is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Global Inno

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Global Innovators are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, Fidelity Global sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidelity ClearPath and Fidelity Global

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

The idea behind Fidelity ClearPath 2045 and Fidelity Global Innovators 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.