Correlation Between Lifex Income and Fidelity Emerging

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

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

Diversification Opportunities for Lifex Income and Fidelity Emerging

0.88

Correlation Coefficient

Lifex Income  Fidelity Emerging

Very poor diversification

The 3 months correlation between Lifex and Fidelity is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Lifex Income and Fidelity Emerging Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Emerging Asia and Lifex Income 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 Lifex Income are associated (or correlated) with Fidelity Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Emerging Asia has no effect on the direction of Lifex Income i.e., Lifex Income and Fidelity Emerging go up and down completely randomly.

Pair Corralation between Lifex Income and Fidelity Emerging

If you would invest  4,962  in Fidelity Emerging Asia on September 15, 2024 and sell it today you would earn a total of  117.00  from holding Fidelity Emerging Asia or generate 2.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	40.91%
Values	Daily Returns

Lifex Income  vs.  Fidelity Emerging Asia

Lifex Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lifex Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Lifex Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Emerging Asia

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Emerging Asia 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 Emerging showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lifex Income and Fidelity Emerging

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

The idea behind Lifex Income and Fidelity Emerging Asia 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.