Correlation Between Fidelity International and Accelerate Arbitrage

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

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

Diversification Opportunities for Fidelity International and Accelerate Arbitrage

0.26

Correlation Coefficient

Fidelity International  Accelerate Arbitrage

Modest diversification

The 3 months correlation between Fidelity and Accelerate is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity International High and Accelerate Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accelerate Arbitrage and Fidelity International 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 International High are associated (or correlated) with Accelerate Arbitrage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accelerate Arbitrage has no effect on the direction of Fidelity International i.e., Fidelity International and Accelerate Arbitrage go up and down completely randomly.

Pair Corralation between Fidelity International and Accelerate Arbitrage

Assuming the 90 days trading horizon Fidelity International High is expected to generate 2.27 times more return on investment than Accelerate Arbitrage. However, Fidelity International is 2.27 times more volatile than Accelerate Arbitrage. It trades about 0.24 of its potential returns per unit of risk. Accelerate Arbitrage is currently generating about 0.07 per unit of risk. If you would invest  3,863  in Fidelity International High on September 15, 2024 and sell it today you would earn a total of  134.00  from holding Fidelity International High or generate 3.47% return on investment over 90 days.

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

Fidelity International High  vs.  Accelerate Arbitrage

Fidelity International

Risk-Adjusted Performance

4 of 100

Insignificant

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

Accelerate Arbitrage

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Accelerate Arbitrage are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, Accelerate Arbitrage 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 International and Accelerate Arbitrage

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

The idea behind Fidelity International High and Accelerate Arbitrage 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.

Check out your portfolio center.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.