Correlation Between Fidelity Global and Global Healthcare

Can any of the company-specific risk be diversified away by investing in both Fidelity Global and Global Healthcare 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 Global Healthcare 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 Global Healthcare Income, you can compare the effects of market volatilities on Fidelity Global and Global Healthcare 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 Global Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Global and Global Healthcare.

Diversification Opportunities for Fidelity Global and Global Healthcare

0.05

Correlation Coefficient

Fidelity Global  Global Healthcare

Significant diversification

The 3 months correlation between Fidelity and Global is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Global Equity and Global Healthcare Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Healthcare Income 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 Global Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Healthcare Income has no effect on the direction of Fidelity Global i.e., Fidelity Global and Global Healthcare go up and down completely randomly.

Pair Corralation between Fidelity Global and Global Healthcare

Assuming the 90 days trading horizon Fidelity Global Equity is expected to under-perform the Global Healthcare. In addition to that, Fidelity Global is 1.02 times more volatile than Global Healthcare Income. It trades about -0.03 of its total potential returns per unit of risk. Global Healthcare Income is currently generating about 0.19 per unit of volatility. If you would invest  747.00  in Global Healthcare Income on December 30, 2024 and sell it today you would earn a total of  61.00  from holding Global Healthcare Income or generate 8.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Fidelity Global Equity  vs.  Global Healthcare Income

Fidelity Global Equity

Risk-Adjusted Performance

Very Weak

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

Global Healthcare Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Healthcare Income are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Global Healthcare may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Fidelity Global and Global Healthcare

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

The idea behind Fidelity Global Equity and Global Healthcare Income 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 Stocks Directory module to find actively traded stocks across global markets.