Correlation Between Fidelity Sustainability and Fidelity Global

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

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

Diversification Opportunities for Fidelity Sustainability and Fidelity Global

0.79

Correlation Coefficient

Fidelity Sustainability  Fidelity Global

Poor diversification

The 3 months correlation between FIDELITY and Fidelity is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Sustainability Bond and Fidelity Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Global Equity and Fidelity Sustainability 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 Sustainability Bond are associated (or correlated) with Fidelity Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Global Equity has no effect on the direction of Fidelity Sustainability i.e., Fidelity Sustainability and Fidelity Global go up and down completely randomly.

Pair Corralation between Fidelity Sustainability and Fidelity Global

Assuming the 90 days horizon Fidelity Sustainability Bond is expected to under-perform the Fidelity Global. But the mutual fund apears to be less risky and, when comparing its historical volatility, Fidelity Sustainability Bond is 1.91 times less risky than Fidelity Global. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Fidelity Global Equity is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,074  in Fidelity Global Equity on October 27, 2024 and sell it today you would earn a total of  22.00  from holding Fidelity Global Equity or generate 1.06% return on investment over 90 days.

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

Fidelity Sustainability Bond  vs.  Fidelity Global Equity

Fidelity Sustainability

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fidelity Global Equity

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Global Equity are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Fidelity Global 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 Sustainability and Fidelity Global

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

The idea behind Fidelity Sustainability Bond and Fidelity Global Equity 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.