Correlation Between Iron Mountain and Fidelity China

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

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

Diversification Opportunities for Iron Mountain and Fidelity China

0.18

Correlation Coefficient

Iron Mountain  Fidelity China

Average diversification

The 3 months correlation between Iron and Fidelity is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Iron Mountain and Fidelity China Special in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity China Special and Iron Mountain 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 Iron Mountain are associated (or correlated) with Fidelity China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity China Special has no effect on the direction of Iron Mountain i.e., Iron Mountain and Fidelity China go up and down completely randomly.

Pair Corralation between Iron Mountain and Fidelity China

Assuming the 90 days trading horizon Iron Mountain is expected to generate 0.97 times more return on investment than Fidelity China. However, Iron Mountain is 1.03 times less risky than Fidelity China. It trades about 0.13 of its potential returns per unit of risk. Fidelity China Special is currently generating about 0.01 per unit of risk. If you would invest  5,185  in Iron Mountain on September 14, 2024 and sell it today you would earn a total of  6,162  from holding Iron Mountain or generate 118.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.5%
Values	Daily Returns

Iron Mountain  vs.  Fidelity China Special

Iron Mountain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iron Mountain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Iron Mountain is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Fidelity China Special

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity China Special are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Fidelity China unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Iron Mountain and Fidelity China

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

The idea behind Iron Mountain and Fidelity China Special 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.