Correlation Between Fidelity Emerging and Dodge Stock

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

By analyzing existing cross correlation between Fidelity Emerging Asia and Dodge Stock Fund, you can compare the effects of market volatilities on Fidelity Emerging and Dodge Stock 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 Dodge Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Emerging and Dodge Stock.

Diversification Opportunities for Fidelity Emerging and Dodge Stock

0.15

Correlation Coefficient

Fidelity Emerging  Dodge Stock

Average diversification

The 3 months correlation between Fidelity and Dodge is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Emerging Asia and Dodge Stock Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dodge Stock Fund 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 Asia are associated (or correlated) with Dodge Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dodge Stock Fund has no effect on the direction of Fidelity Emerging i.e., Fidelity Emerging and Dodge Stock go up and down completely randomly.

Pair Corralation between Fidelity Emerging and Dodge Stock

Assuming the 90 days horizon Fidelity Emerging Asia is expected to generate 1.34 times more return on investment than Dodge Stock. However, Fidelity Emerging is 1.34 times more volatile than Dodge Stock Fund. It trades about 0.11 of its potential returns per unit of risk. Dodge Stock Fund is currently generating about 0.11 per unit of risk. If you would invest  3,578  in Fidelity Emerging Asia on September 21, 2024 and sell it today you would earn a total of  1,367  from holding Fidelity Emerging Asia or generate 38.21% return on investment over 90 days.

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

Fidelity Emerging Asia  vs.  Dodge Stock Fund

Fidelity Emerging Asia

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Emerging Asia are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity Emerging may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Dodge Stock Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dodge Stock Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Dodge Stock 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 Dodge Stock

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

The idea behind Fidelity Emerging Asia and Dodge Stock Fund 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.