Correlation Between Fidelity Europe and Fidelity Global

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

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

Diversification Opportunities for Fidelity Europe and Fidelity Global

0.41

Correlation Coefficient

Fidelity Europe  Fidelity Global

Very weak diversification

The 3 months correlation between Fidelity and Fidelity is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Europe Quality and Fidelity Global Qualityome in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Global Qual and Fidelity Europe 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 Europe Quality are associated (or correlated) with Fidelity Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Global Qual has no effect on the direction of Fidelity Europe i.e., Fidelity Europe and Fidelity Global go up and down completely randomly.

Pair Corralation between Fidelity Europe and Fidelity Global

Assuming the 90 days trading horizon Fidelity Europe Quality is expected to generate 0.82 times more return on investment than Fidelity Global. However, Fidelity Europe Quality is 1.22 times less risky than Fidelity Global. It trades about -0.08 of its potential returns per unit of risk. Fidelity Global Qualityome is currently generating about -0.17 per unit of risk. If you would invest  807.00  in Fidelity Europe Quality on October 12, 2024 and sell it today you would lose (8.00) from holding Fidelity Europe Quality or give up 0.99% of portfolio value over 90 days.

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

Fidelity Europe Quality  vs.  Fidelity Global Qualityome

Fidelity Europe Quality

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Europe Quality has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fidelity Europe is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Fidelity Global Qual

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Global Qualityome has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fidelity Global is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Fidelity Europe and Fidelity Global

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

The idea behind Fidelity Europe Quality and Fidelity Global Qualityome 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.