Correlation Between Cornerstone Strategic and Fidelity Emerging

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

By analyzing existing cross correlation between Cornerstone Strategic Return and Fidelity Emerging Asia, you can compare the effects of market volatilities on Cornerstone Strategic and Fidelity Emerging 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 Cornerstone Strategic with a short position of Fidelity Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornerstone Strategic and Fidelity Emerging.

Diversification Opportunities for Cornerstone Strategic and Fidelity Emerging

0.38

Correlation Coefficient

Cornerstone Strategic  Fidelity Emerging

Weak diversification

The 3 months correlation between Cornerstone and Fidelity is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Cornerstone Strategic Return and Fidelity Emerging Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Emerging Asia and Cornerstone Strategic 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 Cornerstone Strategic Return are associated (or correlated) with Fidelity Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Emerging Asia has no effect on the direction of Cornerstone Strategic i.e., Cornerstone Strategic and Fidelity Emerging go up and down completely randomly.

Pair Corralation between Cornerstone Strategic and Fidelity Emerging

Considering the 90-day investment horizon Cornerstone Strategic Return is expected to under-perform the Fidelity Emerging. In addition to that, Cornerstone Strategic is 3.23 times more volatile than Fidelity Emerging Asia. It trades about 0.0 of its total potential returns per unit of risk. Fidelity Emerging Asia is currently generating about 0.17 per unit of volatility. If you would invest  4,962  in Fidelity Emerging Asia on September 15, 2024 and sell it today you would earn a total of  140.00  from holding Fidelity Emerging Asia or generate 2.82% return on investment over 90 days.

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

Cornerstone Strategic Return  vs.  Fidelity Emerging Asia

Cornerstone Strategic

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cornerstone Strategic Return are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly unfluctuating basic indicators, Cornerstone Strategic reported solid returns over the last few months and may actually be approaching a breakup point.

Fidelity Emerging Asia

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Emerging Asia are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity Emerging showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cornerstone Strategic and Fidelity Emerging

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

The idea behind Cornerstone Strategic Return and Fidelity Emerging Asia 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.