Correlation Between Fidelity Emerging and Fidelity Zero

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

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

Diversification Opportunities for Fidelity Emerging and Fidelity Zero

0.91

Correlation Coefficient

Fidelity Emerging  Fidelity Zero

Almost no diversification

The 3 months correlation between Fidelity and Fidelity is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Emerging Markets and Fidelity Zero International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Zero Intern and Fidelity Emerging 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 Emerging Markets are associated (or correlated) with Fidelity Zero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Zero Intern has no effect on the direction of Fidelity Emerging i.e., Fidelity Emerging and Fidelity Zero go up and down completely randomly.

Pair Corralation between Fidelity Emerging and Fidelity Zero

Assuming the 90 days horizon Fidelity Emerging is expected to generate 1.3 times less return on investment than Fidelity Zero. In addition to that, Fidelity Emerging is 1.13 times more volatile than Fidelity Zero International. It trades about 0.05 of its total potential returns per unit of risk. Fidelity Zero International is currently generating about 0.07 per unit of volatility. If you would invest  931.00  in Fidelity Zero International on December 4, 2024 and sell it today you would earn a total of  273.00  from holding Fidelity Zero International or generate 29.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.8%
Values	Daily Returns

Fidelity Emerging Markets  vs.  Fidelity Zero International

Fidelity Emerging Markets

Risk-Adjusted Performance

Very Weak

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

Fidelity Zero Intern

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Zero International are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Fidelity Zero 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 Emerging and Fidelity Zero

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

The idea behind Fidelity Emerging Markets and Fidelity Zero International 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.