Correlation Between Fidelity International and Longleaf Partners

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

By analyzing existing cross correlation between Fidelity International Index and Longleaf Partners International, you can compare the effects of market volatilities on Fidelity International and Longleaf Partners 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 Longleaf Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity International and Longleaf Partners.

Diversification Opportunities for Fidelity International and Longleaf Partners

0.84

Correlation Coefficient

Fidelity International  Longleaf Partners

Very poor diversification

The 3 months correlation between FIDELITY and Longleaf is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity International Index and Longleaf Partners Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longleaf Partners 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 Index are associated (or correlated) with Longleaf Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longleaf Partners has no effect on the direction of Fidelity International i.e., Fidelity International and Longleaf Partners go up and down completely randomly.

Pair Corralation between Fidelity International and Longleaf Partners

Assuming the 90 days horizon Fidelity International Index is expected to generate 0.94 times more return on investment than Longleaf Partners. However, Fidelity International Index is 1.06 times less risky than Longleaf Partners. It trades about 0.17 of its potential returns per unit of risk. Longleaf Partners International is currently generating about 0.04 per unit of risk. If you would invest  4,760  in Fidelity International Index on December 30, 2024 and sell it today you would earn a total of  428.00  from holding Fidelity International Index or generate 8.99% return on investment over 90 days.

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

Fidelity International Index  vs.  Longleaf Partners Internationa

Fidelity International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity International Index are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Longleaf Partners

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Longleaf Partners International are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Longleaf Partners 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 International and Longleaf Partners

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

The idea behind Fidelity International Index and Longleaf Partners 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.