Correlation Between Mackenzie Canadian and Fidelity International

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

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

Diversification Opportunities for Mackenzie Canadian and Fidelity International

-0.42

Correlation Coefficient

Mackenzie Canadian  Fidelity International

Very good diversification

The 3 months correlation between Mackenzie and Fidelity is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Mackenzie Canadian Equity and Fidelity International High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity International and Mackenzie Canadian 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 Mackenzie Canadian Equity 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 Mackenzie Canadian i.e., Mackenzie Canadian and Fidelity International go up and down completely randomly.

Pair Corralation between Mackenzie Canadian and Fidelity International

Assuming the 90 days trading horizon Mackenzie Canadian Equity is expected to generate 0.86 times more return on investment than Fidelity International. However, Mackenzie Canadian Equity is 1.16 times less risky than Fidelity International. It trades about 0.12 of its potential returns per unit of risk. Fidelity International High is currently generating about -0.06 per unit of risk. If you would invest  14,555  in Mackenzie Canadian Equity on October 7, 2024 and sell it today you would earn a total of  595.00  from holding Mackenzie Canadian Equity or generate 4.09% return on investment over 90 days.

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

Mackenzie Canadian Equity  vs.  Fidelity International High

Mackenzie Canadian Equity

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mackenzie Canadian Equity are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Mackenzie Canadian is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Fidelity International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity International High has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Fidelity International is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Mackenzie Canadian and Fidelity International

The main advantage of trading using opposite Mackenzie Canadian and Fidelity International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mackenzie Canadian 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 Mackenzie Canadian Equity and Fidelity International High 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.