Correlation Between Fidelity Worldwide and Fidelity Sustainable

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

By analyzing existing cross correlation between Fidelity Worldwide Fund and Fidelity Sustainable Multi Asset, you can compare the effects of market volatilities on Fidelity Worldwide and Fidelity Sustainable 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 Worldwide with a short position of Fidelity Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Worldwide and Fidelity Sustainable.

Diversification Opportunities for Fidelity Worldwide and Fidelity Sustainable

0.72

Correlation Coefficient

Fidelity Worldwide  Fidelity Sustainable

Poor diversification

The 3 months correlation between Fidelity and Fidelity is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Worldwide Fund and Fidelity Sustainable Multi Ass in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Sustainable and Fidelity Worldwide 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 Worldwide Fund are associated (or correlated) with Fidelity Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Sustainable has no effect on the direction of Fidelity Worldwide i.e., Fidelity Worldwide and Fidelity Sustainable go up and down completely randomly.

Pair Corralation between Fidelity Worldwide and Fidelity Sustainable

Assuming the 90 days horizon Fidelity Worldwide Fund is expected to under-perform the Fidelity Sustainable. In addition to that, Fidelity Worldwide is 3.31 times more volatile than Fidelity Sustainable Multi Asset. It trades about -0.27 of its total potential returns per unit of risk. Fidelity Sustainable Multi Asset is currently generating about -0.31 per unit of volatility. If you would invest  1,092  in Fidelity Sustainable Multi Asset on October 7, 2024 and sell it today you would lose (54.00) from holding Fidelity Sustainable Multi Asset or give up 4.95% of portfolio value over 90 days.

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

Fidelity Worldwide Fund  vs.  Fidelity Sustainable Multi Ass

Fidelity Worldwide

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Worldwide Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Fidelity Sustainable

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Fidelity Worldwide and Fidelity Sustainable

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

The idea behind Fidelity Worldwide Fund and Fidelity Sustainable Multi Asset 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.