Correlation Between Global X and Fidelity High

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

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

Diversification Opportunities for Global X and Fidelity High

0.95

Correlation Coefficient

Global X  Fidelity High

Almost no diversification

The 3 months correlation between Global and Fidelity is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Global X SP and Fidelity High Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity High Quality and Global X 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 Global X SP are associated (or correlated) with Fidelity High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity High Quality has no effect on the direction of Global X i.e., Global X and Fidelity High go up and down completely randomly.

Pair Corralation between Global X and Fidelity High

Assuming the 90 days trading horizon Global X SP is expected to generate 1.22 times more return on investment than Fidelity High. However, Global X is 1.22 times more volatile than Fidelity High Quality. It trades about 0.28 of its potential returns per unit of risk. Fidelity High Quality is currently generating about 0.18 per unit of risk. If you would invest  7,828  in Global X SP on September 14, 2024 and sell it today you would earn a total of  997.00  from holding Global X SP or generate 12.74% return on investment over 90 days.

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

Global X SP  vs.  Fidelity High Quality

Global X SP

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X SP are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fidelity High Quality

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity High Quality are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Fidelity High may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Global X and Fidelity High

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

The idea behind Global X SP and Fidelity High Quality 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.

Check out your portfolio center.

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 Global Correlations module to find global opportunities by holding instruments from different markets.