Correlation Between Fidelity International and Fidelity Small

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

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

Diversification Opportunities for Fidelity International and Fidelity Small

0.23

Correlation Coefficient

Fidelity International  Fidelity Small

Modest diversification

The 3 months correlation between Fidelity and Fidelity is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity International Value and Fidelity Small Mid Factor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Small Mid and Fidelity International 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 International Value are associated (or correlated) with Fidelity Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Small Mid has no effect on the direction of Fidelity International i.e., Fidelity International and Fidelity Small go up and down completely randomly.

Pair Corralation between Fidelity International and Fidelity Small

Given the investment horizon of 90 days Fidelity International is expected to generate 1.55 times less return on investment than Fidelity Small. But when comparing it to its historical volatility, Fidelity International Value is 1.21 times less risky than Fidelity Small. It trades about 0.05 of its potential returns per unit of risk. Fidelity Small Mid Factor is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,304  in Fidelity Small Mid Factor on October 27, 2024 and sell it today you would earn a total of  992.00  from holding Fidelity Small Mid Factor or generate 30.02% return on investment over 90 days.

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

Fidelity International Value  vs.  Fidelity Small Mid Factor

Fidelity International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity International Value has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Fidelity International is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Small Mid

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Small Mid Factor are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, Fidelity Small is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Fidelity International and Fidelity Small

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

The idea behind Fidelity International Value and Fidelity Small Mid Factor 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..