Correlation Between CDSPI Global and Fidelity Global

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

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

Diversification Opportunities for CDSPI Global and Fidelity Global

0.76

Correlation Coefficient

CDSPI Global  Fidelity Global

Poor diversification

The 3 months correlation between CDSPI and Fidelity is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding CDSPI Global Growth and Fidelity Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Global Equity and CDSPI Global 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 CDSPI Global Growth 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 Equity has no effect on the direction of CDSPI Global i.e., CDSPI Global and Fidelity Global go up and down completely randomly.

Pair Corralation between CDSPI Global and Fidelity Global

Assuming the 90 days trading horizon CDSPI Global Growth is expected to under-perform the Fidelity Global. In addition to that, CDSPI Global is 1.26 times more volatile than Fidelity Global Equity. It trades about -0.04 of its total potential returns per unit of risk. Fidelity Global Equity is currently generating about -0.01 per unit of volatility. If you would invest  1,111  in Fidelity Global Equity on December 25, 2024 and sell it today you would lose (5.00) from holding Fidelity Global Equity or give up 0.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

CDSPI Global Growth  vs.  Fidelity Global Equity

CDSPI Global Growth

Risk-Adjusted Performance

Very Weak

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

Fidelity Global Equity

Risk-Adjusted Performance

Very Weak

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

Pair Trading with CDSPI Global and Fidelity Global

The main advantage of trading using opposite CDSPI Global and Fidelity Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDSPI Global 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 CDSPI Global Growth and Fidelity Global Equity 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.