Correlation Between Edgepoint Canadian and Fidelity ClearPath

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

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

Diversification Opportunities for Edgepoint Canadian and Fidelity ClearPath

0.94

Correlation Coefficient

Edgepoint Canadian  Fidelity ClearPath

Almost no diversification

The 3 months correlation between Edgepoint and Fidelity is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Edgepoint Canadian Portfolio and Fidelity ClearPath 2045 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity ClearPath 2045 and Edgepoint 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 Edgepoint Canadian Portfolio are associated (or correlated) with Fidelity ClearPath. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity ClearPath 2045 has no effect on the direction of Edgepoint Canadian i.e., Edgepoint Canadian and Fidelity ClearPath go up and down completely randomly.

Pair Corralation between Edgepoint Canadian and Fidelity ClearPath

Assuming the 90 days trading horizon Edgepoint Canadian Portfolio is expected to generate 1.01 times more return on investment than Fidelity ClearPath. However, Edgepoint Canadian is 1.01 times more volatile than Fidelity ClearPath 2045. It trades about 0.34 of its potential returns per unit of risk. Fidelity ClearPath 2045 is currently generating about 0.26 per unit of risk. If you would invest  4,920  in Edgepoint Canadian Portfolio on September 5, 2024 and sell it today you would earn a total of  637.00  from holding Edgepoint Canadian Portfolio or generate 12.95% return on investment over 90 days.

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

Edgepoint Canadian Portfolio  vs.  Fidelity ClearPath 2045

Edgepoint Canadian

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Edgepoint Canadian Portfolio are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively unfluctuating forward-looking indicators, Edgepoint Canadian may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fidelity ClearPath 2045

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity ClearPath 2045 are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, Fidelity ClearPath may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Edgepoint Canadian and Fidelity ClearPath

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

The idea behind Edgepoint Canadian Portfolio and Fidelity ClearPath 2045 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.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.