Correlation Between Parnassus Mid and Fidelity International

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

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

Diversification Opportunities for Parnassus Mid and Fidelity International

0.39

Correlation Coefficient

Parnassus Mid  Fidelity International

Weak diversification

The 3 months correlation between Parnassus and Fidelity is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Parnassus Mid Cap and Fidelity International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity International and Parnassus Mid 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 Parnassus Mid Cap are associated (or correlated) with Fidelity International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity International has no effect on the direction of Parnassus Mid i.e., Parnassus Mid and Fidelity International go up and down completely randomly.

Pair Corralation between Parnassus Mid and Fidelity International

Assuming the 90 days horizon Parnassus Mid Cap is expected to under-perform the Fidelity International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Parnassus Mid Cap is 1.06 times less risky than Fidelity International. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Fidelity International Growth is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,997  in Fidelity International Growth on December 28, 2024 and sell it today you would earn a total of  71.00  from holding Fidelity International Growth or generate 3.56% return on investment over 90 days.

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

Parnassus Mid Cap  vs.  Fidelity International Growth

Parnassus Mid Cap

Risk-Adjusted Performance

Very Weak

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

Fidelity International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity International Growth are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Fidelity International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Parnassus Mid and Fidelity International

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

The idea behind Parnassus Mid Cap and Fidelity International 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 Commodity Directory module to find actively traded commodities issued by global exchanges.