Correlation Between Fidelity Climate and Fidelity Sustainable

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

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

Diversification Opportunities for Fidelity Climate and Fidelity Sustainable

-0.38

Correlation Coefficient

Fidelity Climate  Fidelity Sustainable

Very good diversification

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

Pair Corralation between Fidelity Climate and Fidelity Sustainable

Assuming the 90 days horizon Fidelity Climate Action is expected to under-perform the Fidelity Sustainable. In addition to that, Fidelity Climate is 1.24 times more volatile than Fidelity Sustainable International. It trades about -0.11 of its total potential returns per unit of risk. Fidelity Sustainable International is currently generating about 0.06 per unit of volatility. If you would invest  939.00  in Fidelity Sustainable International on December 30, 2024 and sell it today you would earn a total of  30.00  from holding Fidelity Sustainable International or generate 3.19% return on investment over 90 days.

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

Fidelity Climate Action  vs.  Fidelity Sustainable Internati

Fidelity Climate Action

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Climate Action has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Fidelity Sustainable

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Sustainable International are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Sustainable is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fidelity Climate and Fidelity Sustainable

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

The idea behind Fidelity Climate Action and Fidelity Sustainable International 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.