Correlation Between Fidelity Dividend and RBC Quant

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

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

Diversification Opportunities for Fidelity Dividend and RBC Quant

-0.08

Correlation Coefficient

Fidelity Dividend  RBC Quant

Good diversification

The 3 months correlation between Fidelity and RBC is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Dividend for and RBC Quant EAFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Quant EAFE and Fidelity Dividend 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 Dividend for are associated (or correlated) with RBC Quant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Quant EAFE has no effect on the direction of Fidelity Dividend i.e., Fidelity Dividend and RBC Quant go up and down completely randomly.

Pair Corralation between Fidelity Dividend and RBC Quant

Assuming the 90 days trading horizon Fidelity Dividend for is expected to under-perform the RBC Quant. In addition to that, Fidelity Dividend is 1.31 times more volatile than RBC Quant EAFE. It trades about -0.05 of its total potential returns per unit of risk. RBC Quant EAFE is currently generating about 0.15 per unit of volatility. If you would invest  2,876  in RBC Quant EAFE on December 30, 2024 and sell it today you would earn a total of  186.00  from holding RBC Quant EAFE or generate 6.47% return on investment over 90 days.

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

Fidelity Dividend for  vs.  RBC Quant EAFE

Fidelity Dividend for

Risk-Adjusted Performance

Very Weak

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

RBC Quant EAFE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Quant EAFE are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, RBC Quant 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 Dividend and RBC Quant

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

The idea behind Fidelity Dividend for and RBC Quant EAFE 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.