Correlation Between Fidelity Sustainable and Fidelity International

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

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

Diversification Opportunities for Fidelity Sustainable and Fidelity International

0.31

Correlation Coefficient

Fidelity Sustainable  Fidelity International

Weak diversification

The 3 months correlation between Fidelity and Fidelity is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Sustainable World and Fidelity International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity International and Fidelity Sustainable 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 Sustainable World are associated (or correlated) with Fidelity International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity International has no effect on the direction of Fidelity Sustainable i.e., Fidelity Sustainable and Fidelity International go up and down completely randomly.

Pair Corralation between Fidelity Sustainable and Fidelity International

Assuming the 90 days trading horizon Fidelity Sustainable World is expected to generate 0.77 times more return on investment than Fidelity International. However, Fidelity Sustainable World is 1.29 times less risky than Fidelity International. It trades about 0.3 of its potential returns per unit of risk. Fidelity International Value is currently generating about 0.05 per unit of risk. If you would invest  4,315  in Fidelity Sustainable World on September 5, 2024 and sell it today you would earn a total of  534.00  from holding Fidelity Sustainable World or generate 12.38% return on investment over 90 days.

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

Fidelity Sustainable World  vs.  Fidelity International Value

Fidelity Sustainable

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Sustainable World are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Fidelity Sustainable may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fidelity International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity International Value are ranked lower than 3 (%) 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.

Pair Trading with Fidelity Sustainable and Fidelity International

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

The idea behind Fidelity Sustainable World and Fidelity International Value 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.