Correlation Between Amazon and Fidelity Overseas

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

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

Diversification Opportunities for Amazon and Fidelity Overseas

-0.36

Correlation Coefficient

Amazon  Fidelity Overseas

Very good diversification

The 3 months correlation between Amazon and Fidelity is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Fidelity Overseas Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Overseas and Amazon 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 Amazon Inc are associated (or correlated) with Fidelity Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Overseas has no effect on the direction of Amazon i.e., Amazon and Fidelity Overseas go up and down completely randomly.

Pair Corralation between Amazon and Fidelity Overseas

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the Fidelity Overseas. In addition to that, Amazon is 1.84 times more volatile than Fidelity Overseas Fund. It trades about -0.12 of its total potential returns per unit of risk. Fidelity Overseas Fund is currently generating about 0.13 per unit of volatility. If you would invest  6,266  in Fidelity Overseas Fund on December 29, 2024 and sell it today you would earn a total of  472.00  from holding Fidelity Overseas Fund or generate 7.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Amazon Inc  vs.  Fidelity Overseas Fund

Amazon Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Fidelity Overseas

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Overseas Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Fidelity Overseas may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Amazon and Fidelity Overseas

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

The idea behind Amazon Inc and Fidelity Overseas Fund 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.