Correlation Between Fidelity Total and Fidelity Extended

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

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

Diversification Opportunities for Fidelity Total and Fidelity Extended

-0.56

Correlation Coefficient

Fidelity Total  Fidelity Extended

Excellent diversification

The 3 months correlation between Fidelity and Fidelity is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Total International and Fidelity Extended Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Extended Market and Fidelity Total 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 Total International are associated (or correlated) with Fidelity Extended. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Extended Market has no effect on the direction of Fidelity Total i.e., Fidelity Total and Fidelity Extended go up and down completely randomly.

Pair Corralation between Fidelity Total and Fidelity Extended

Assuming the 90 days horizon Fidelity Total is expected to generate 16.8 times less return on investment than Fidelity Extended. But when comparing it to its historical volatility, Fidelity Total International is 1.32 times less risky than Fidelity Extended. It trades about 0.01 of its potential returns per unit of risk. Fidelity Extended Market is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  7,990  in Fidelity Extended Market on September 19, 2024 and sell it today you would earn a total of  1,697  from holding Fidelity Extended Market or generate 21.24% return on investment over 90 days.

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

Fidelity Total International  vs.  Fidelity Extended Market

Fidelity Total Inter

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fidelity Extended Market

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Fidelity Total and Fidelity Extended

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

The idea behind Fidelity Total International and Fidelity Extended Market 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.