Correlation Between Korea Closed and Fidelity Large

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

By analyzing existing cross correlation between Korea Closed and Fidelity Large Cap, you can compare the effects of market volatilities on Korea Closed and Fidelity Large 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 Korea Closed with a short position of Fidelity Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Closed and Fidelity Large.

Diversification Opportunities for Korea Closed and Fidelity Large

-0.43

Correlation Coefficient

Korea Closed  Fidelity Large

Very good diversification

The 3 months correlation between Korea and Fidelity is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Korea Closed and Fidelity Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Large Cap and Korea Closed 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 Korea Closed are associated (or correlated) with Fidelity Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Large Cap has no effect on the direction of Korea Closed i.e., Korea Closed and Fidelity Large go up and down completely randomly.

Pair Corralation between Korea Closed and Fidelity Large

Allowing for the 90-day total investment horizon Korea Closed is expected to generate 1.67 times more return on investment than Fidelity Large. However, Korea Closed is 1.67 times more volatile than Fidelity Large Cap. It trades about 0.13 of its potential returns per unit of risk. Fidelity Large Cap is currently generating about -0.16 per unit of risk. If you would invest  1,912  in Korea Closed on October 10, 2024 and sell it today you would earn a total of  71.00  from holding Korea Closed or generate 3.71% return on investment over 90 days.

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

Korea Closed  vs.  Fidelity Large Cap

Korea Closed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Korea Closed has generated negative risk-adjusted returns adding no value to fund investors. Despite latest unsteady performance, the Fund's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the mutual fund stockholders.

Fidelity Large Cap

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Large Cap are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, Fidelity Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Korea Closed and Fidelity Large

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

The idea behind Korea Closed and Fidelity Large Cap 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.