Correlation Between Fidelity Global and CDSPI Global

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

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

Diversification Opportunities for Fidelity Global and CDSPI Global

0.83

Correlation Coefficient

Fidelity Global  CDSPI Global

Very poor diversification

The 3 months correlation between Fidelity and CDSPI is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Global Equity and CDSPI Global Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDSPI Global Growth and Fidelity Global 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 Global Equity are associated (or correlated) with CDSPI Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDSPI Global Growth has no effect on the direction of Fidelity Global i.e., Fidelity Global and CDSPI Global go up and down completely randomly.

Pair Corralation between Fidelity Global and CDSPI Global

Assuming the 90 days trading horizon Fidelity Global Equity is expected to generate 0.77 times more return on investment than CDSPI Global. However, Fidelity Global Equity is 1.3 times less risky than CDSPI Global. It trades about 0.14 of its potential returns per unit of risk. CDSPI Global Growth is currently generating about 0.1 per unit of risk. If you would invest  1,060  in Fidelity Global Equity on October 11, 2024 and sell it today you would earn a total of  49.00  from holding Fidelity Global Equity or generate 4.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Fidelity Global Equity  vs.  CDSPI Global Growth

Fidelity Global Equity

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Global Equity are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy basic indicators, Fidelity Global is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

CDSPI Global Growth

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CDSPI Global Growth are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, CDSPI Global is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fidelity Global and CDSPI Global

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

The idea behind Fidelity Global Equity and CDSPI Global Growth 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.