Correlation Between Fidelity China and Redwood Real
Can any of the company-specific risk be diversified away by investing in both Fidelity China and Redwood Real 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 China and Redwood Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity China Region and Redwood Real Estate, you can compare the effects of market volatilities on Fidelity China and Redwood Real 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 China with a short position of Redwood Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity China and Redwood Real.
Diversification Opportunities for Fidelity China and Redwood Real
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and Redwood is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity China Region and Redwood Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redwood Real Estate and Fidelity China 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 China Region are associated (or correlated) with Redwood Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redwood Real Estate has no effect on the direction of Fidelity China i.e., Fidelity China and Redwood Real go up and down completely randomly.
Pair Corralation between Fidelity China and Redwood Real
Assuming the 90 days horizon Fidelity China Region is expected to generate 51.74 times more return on investment than Redwood Real. However, Fidelity China is 51.74 times more volatile than Redwood Real Estate. It trades about 0.08 of its potential returns per unit of risk. Redwood Real Estate is currently generating about 1.12 per unit of risk. If you would invest 3,895 in Fidelity China Region on December 25, 2024 and sell it today you would earn a total of 247.00 from holding Fidelity China Region or generate 6.34% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Fidelity China Region vs. Redwood Real Estate
Performance |
Timeline |
Fidelity China Region |
Redwood Real Estate |
Fidelity China and Redwood Real Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fidelity China and Redwood Real
The main advantage of trading using opposite Fidelity China and Redwood Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity China position performs unexpectedly, Redwood Real 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 Redwood Real will offset losses from the drop in Redwood Real's long position.Fidelity China vs. Ivy Natural Resources | Fidelity China vs. Clearbridge Energy Mlp | Fidelity China vs. Franklin Natural Resources | Fidelity China vs. Goehring Rozencwajg Resources |
Redwood Real vs. Invesco Real Estate | Redwood Real vs. Short Real Estate | Redwood Real vs. Real Estate Ultrasector | Redwood Real vs. Jhancock Real Estate |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Global Correlations Find global opportunities by holding instruments from different markets | |
Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |