Correlation Between PHN Canadian and Fidelity Tactical

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

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

Diversification Opportunities for PHN Canadian and Fidelity Tactical

0.96

Correlation Coefficient

PHN Canadian  Fidelity Tactical

Almost no diversification

The 3 months correlation between PHN and Fidelity is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding PHN Canadian Equity and Fidelity Tactical High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Tactical High and PHN 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 PHN Canadian Equity are associated (or correlated) with Fidelity Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Tactical High has no effect on the direction of PHN Canadian i.e., PHN Canadian and Fidelity Tactical go up and down completely randomly.

Pair Corralation between PHN Canadian and Fidelity Tactical

Assuming the 90 days trading horizon PHN Canadian Equity is expected to generate 0.85 times more return on investment than Fidelity Tactical. However, PHN Canadian Equity is 1.18 times less risky than Fidelity Tactical. It trades about 0.33 of its potential returns per unit of risk. Fidelity Tactical High is currently generating about 0.28 per unit of risk. If you would invest  2,058  in PHN Canadian Equity on September 1, 2024 and sell it today you would earn a total of  213.00  from holding PHN Canadian Equity or generate 10.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.41%
Values	Daily Returns

PHN Canadian Equity  vs.  Fidelity Tactical High

PHN Canadian Equity

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PHN Canadian Equity are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of very unfluctuating basic indicators, PHN Canadian may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Fidelity Tactical High

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Tactical High are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of very weak basic indicators, Fidelity Tactical may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with PHN Canadian and Fidelity Tactical

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

The idea behind PHN Canadian Equity and Fidelity Tactical High 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.