Correlation Between Fidelity Canadian and Invesco SP

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

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

Diversification Opportunities for Fidelity Canadian and Invesco SP

-0.79

Correlation Coefficient

Fidelity Canadian  Invesco SP

Pay attention - limited upside

The 3 months correlation between Fidelity and Invesco is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Canadian Growth and Invesco SP International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP International and Fidelity 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 Fidelity Canadian Growth are associated (or correlated) with Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP International has no effect on the direction of Fidelity Canadian i.e., Fidelity Canadian and Invesco SP go up and down completely randomly.

Pair Corralation between Fidelity Canadian and Invesco SP

Assuming the 90 days trading horizon Fidelity Canadian Growth is expected to generate 7.45 times more return on investment than Invesco SP. However, Fidelity Canadian is 7.45 times more volatile than Invesco SP International. It trades about 0.49 of its potential returns per unit of risk. Invesco SP International is currently generating about -0.11 per unit of risk. If you would invest  11,445  in Fidelity Canadian Growth on September 11, 2024 and sell it today you would earn a total of  2,232  from holding Fidelity Canadian Growth or generate 19.5% return on investment over 90 days.

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

Fidelity Canadian Growth  vs.  Invesco SP International

Fidelity Canadian Growth

Risk-Adjusted Performance

38 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Canadian Growth are ranked lower than 38 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, Fidelity Canadian sustained solid returns over the last few months and may actually be approaching a breakup point.

Invesco SP International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Fidelity Canadian and Invesco SP

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

The idea behind Fidelity Canadian Growth and Invesco SP International 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.