Correlation Between Fidelity Global and TD Canadian

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

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

Diversification Opportunities for Fidelity Global and TD Canadian

0.64

Correlation Coefficient

Fidelity Global  TD Canadian

Poor diversification

The 3 months correlation between Fidelity and TCLB is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Global Monthly and TD Canadian Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Canadian Long and Fidelity Global 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 Global Monthly are associated (or correlated) with TD Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD Canadian Long has no effect on the direction of Fidelity Global i.e., Fidelity Global and TD Canadian go up and down completely randomly.

Pair Corralation between Fidelity Global and TD Canadian

Assuming the 90 days trading horizon Fidelity Global Monthly is expected to under-perform the TD Canadian. But the etf apears to be less risky and, when comparing its historical volatility, Fidelity Global Monthly is 1.55 times less risky than TD Canadian. The etf trades about -0.01 of its potential returns per unit of risk. The TD Canadian Long is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  11,857  in TD Canadian Long on October 23, 2024 and sell it today you would lose (2.00) from holding TD Canadian Long or give up 0.02% of portfolio value over 90 days.

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

Fidelity Global Monthly  vs.  TD Canadian Long

Fidelity Global Monthly

Risk-Adjusted Performance

0 of 100

Very Weak

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

TD Canadian Long

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TD Canadian Long has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, TD Canadian 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 Global and TD Canadian

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

The idea behind Fidelity Global Monthly and TD Canadian Long 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.