Correlation Between Fidelity Capital and Dfa International

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

By analyzing existing cross correlation between Fidelity Capital Income and Dfa International Social, you can compare the effects of market volatilities on Fidelity Capital and Dfa International 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 Fidelity Capital with a short position of Dfa International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Capital and Dfa International.

Diversification Opportunities for Fidelity Capital and Dfa International

-0.06

Correlation Coefficient

Fidelity Capital  Dfa International

Good diversification

The 3 months correlation between Fidelity and Dfa is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Capital Income and Dfa International Social in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa International Social and Fidelity Capital 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 Fidelity Capital Income are associated (or correlated) with Dfa International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa International Social has no effect on the direction of Fidelity Capital i.e., Fidelity Capital and Dfa International go up and down completely randomly.

Pair Corralation between Fidelity Capital and Dfa International

Assuming the 90 days horizon Fidelity Capital Income is expected to under-perform the Dfa International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Fidelity Capital Income is 1.97 times less risky than Dfa International. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Dfa International Social is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,432  in Dfa International Social on December 20, 2024 and sell it today you would earn a total of  150.00  from holding Dfa International Social or generate 10.47% return on investment over 90 days.

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

Fidelity Capital Income  vs.  Dfa International Social

Fidelity Capital Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Capital Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Fidelity Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dfa International Social

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dfa International Social are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Dfa International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Fidelity Capital and Dfa International

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

The idea behind Fidelity Capital Income and Dfa International Social 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..