Correlation Between Fidelity Sai and First Trust

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

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

Diversification Opportunities for Fidelity Sai and First Trust

0.89

Correlation Coefficient

Fidelity Sai  First Trust

Very poor diversification

The 3 months correlation between Fidelity and First is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Sai International and First Trust Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Global and Fidelity Sai 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 Sai International are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Global has no effect on the direction of Fidelity Sai i.e., Fidelity Sai and First Trust go up and down completely randomly.

Pair Corralation between Fidelity Sai and First Trust

Assuming the 90 days horizon Fidelity Sai International is expected to generate 0.71 times more return on investment than First Trust. However, Fidelity Sai International is 1.4 times less risky than First Trust. It trades about 0.04 of its potential returns per unit of risk. First Trust Global is currently generating about 0.0 per unit of risk. If you would invest  748.00  in Fidelity Sai International on September 5, 2024 and sell it today you would earn a total of  120.00  from holding Fidelity Sai International or generate 16.04% return on investment over 90 days.

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

Fidelity Sai International  vs.  First Trust Global

Fidelity Sai Interna

Risk-Adjusted Performance

0 of 100

Very Weak

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

First Trust Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Trust Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, First Trust is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Fidelity Sai and First Trust

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

The idea behind Fidelity Sai International and First Trust Global 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.