Correlation Between Fidelity Canadian and Fidelity Value

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

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

Diversification Opportunities for Fidelity Canadian and Fidelity Value

0.76

Correlation Coefficient

Fidelity Canadian  Fidelity Value

Poor diversification

The 3 months correlation between Fidelity and Fidelity is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Canadian Value and Fidelity Value ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Value ETF and Fidelity 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 Fidelity Canadian Value are associated (or correlated) with Fidelity Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Value ETF has no effect on the direction of Fidelity Canadian i.e., Fidelity Canadian and Fidelity Value go up and down completely randomly.

Pair Corralation between Fidelity Canadian and Fidelity Value

Assuming the 90 days trading horizon Fidelity Canadian Value is expected to under-perform the Fidelity Value. But the etf apears to be less risky and, when comparing its historical volatility, Fidelity Canadian Value is 1.08 times less risky than Fidelity Value. The etf trades about -0.02 of its potential returns per unit of risk. The Fidelity Value ETF is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,047  in Fidelity Value ETF on December 3, 2024 and sell it today you would earn a total of  40.00  from holding Fidelity Value ETF or generate 1.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Fidelity Canadian Value  vs.  Fidelity Value ETF

Fidelity Canadian Value

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Canadian Value has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Fidelity Canadian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Fidelity Value ETF

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Value ETF are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Fidelity Value is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Fidelity Canadian and Fidelity Value

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

The idea behind Fidelity Canadian Value and Fidelity Value ETF 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.