Correlation Between Global X and Fidelity Canadian

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

By analyzing existing cross correlation between Global X SPTSX and Fidelity Canadian Value, you can compare the effects of market volatilities on Global X and Fidelity Canadian 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 Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Fidelity Canadian.

Diversification Opportunities for Global X and Fidelity Canadian

0.66

Correlation Coefficient

Global X  Fidelity Canadian

Poor diversification

The 3 months correlation between Global and Fidelity is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Global X SPTSX and Fidelity Canadian Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Canadian Value 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 SPTSX are associated (or correlated) with Fidelity Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Canadian Value has no effect on the direction of Global X i.e., Global X and Fidelity Canadian go up and down completely randomly.

Pair Corralation between Global X and Fidelity Canadian

Assuming the 90 days trading horizon Global X SPTSX is expected to generate 0.93 times more return on investment than Fidelity Canadian. However, Global X SPTSX is 1.07 times less risky than Fidelity Canadian. It trades about 0.33 of its potential returns per unit of risk. Fidelity Canadian Value is currently generating about 0.26 per unit of risk. If you would invest  6,089  in Global X SPTSX on September 12, 2024 and sell it today you would earn a total of  602.00  from holding Global X SPTSX or generate 9.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Global X SPTSX  vs.  Fidelity Canadian Value

Global X SPTSX

Risk-Adjusted Performance

26 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X SPTSX are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Global X may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fidelity Canadian Value

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Canadian Value are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Fidelity Canadian may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Global X and Fidelity Canadian

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

The idea behind Global X SPTSX and Fidelity Canadian Value 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.