Correlation Between Fidelity Tactical and CDSPI Global

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

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

Diversification Opportunities for Fidelity Tactical and CDSPI Global

0.74

Correlation Coefficient

Fidelity Tactical  CDSPI Global

Poor diversification

The 3 months correlation between Fidelity and CDSPI is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Tactical High and CDSPI Global Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDSPI Global Growth and Fidelity Tactical 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 Tactical High are associated (or correlated) with CDSPI Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDSPI Global Growth has no effect on the direction of Fidelity Tactical i.e., Fidelity Tactical and CDSPI Global go up and down completely randomly.

Pair Corralation between Fidelity Tactical and CDSPI Global

Assuming the 90 days trading horizon Fidelity Tactical High is expected to generate 0.8 times more return on investment than CDSPI Global. However, Fidelity Tactical High is 1.25 times less risky than CDSPI Global. It trades about -0.01 of its potential returns per unit of risk. CDSPI Global Growth is currently generating about -0.03 per unit of risk. If you would invest  1,071  in Fidelity Tactical High on December 25, 2024 and sell it today you would lose (6.00) from holding Fidelity Tactical High or give up 0.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Fidelity Tactical High  vs.  CDSPI Global Growth

Fidelity Tactical High

Risk-Adjusted Performance

Very Weak

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

CDSPI Global Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days CDSPI Global Growth has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, CDSPI Global is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fidelity Tactical and CDSPI Global

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

The idea behind Fidelity Tactical High and CDSPI Global Growth 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.