Correlation Between Fidelity Value and Fidelity Canada

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

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

Diversification Opportunities for Fidelity Value and Fidelity Canada

0.92

Correlation Coefficient

Fidelity Value  Fidelity Canada

Almost no diversification

The 3 months correlation between Fidelity and Fidelity is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Value Fund and Fidelity Canada Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Canada and Fidelity Value 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 Value Fund are associated (or correlated) with Fidelity Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Canada has no effect on the direction of Fidelity Value i.e., Fidelity Value and Fidelity Canada go up and down completely randomly.

Pair Corralation between Fidelity Value and Fidelity Canada

Assuming the 90 days horizon Fidelity Value Fund is expected to generate 1.65 times more return on investment than Fidelity Canada. However, Fidelity Value is 1.65 times more volatile than Fidelity Canada Fund. It trades about 0.38 of its potential returns per unit of risk. Fidelity Canada Fund is currently generating about 0.34 per unit of risk. If you would invest  1,579  in Fidelity Value Fund on September 3, 2024 and sell it today you would earn a total of  131.00  from holding Fidelity Value Fund or generate 8.3% return on investment over 90 days.

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

Fidelity Value Fund  vs.  Fidelity Canada Fund

Fidelity Value

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Value Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Fidelity Value may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fidelity Canada

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Canada Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Fidelity Canada may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fidelity Value and Fidelity Canada

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

The idea behind Fidelity Value Fund and Fidelity Canada Fund 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.