Correlation Between Fidelity ClearPath and Capital Group

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

By analyzing existing cross correlation between Fidelity ClearPath 2045 and Capital Group Global, you can compare the effects of market volatilities on Fidelity ClearPath and Capital Group 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 ClearPath with a short position of Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity ClearPath and Capital Group.

Diversification Opportunities for Fidelity ClearPath and Capital Group

0.97

Correlation Coefficient

Fidelity ClearPath  Capital Group

Almost no diversification

The 3 months correlation between Fidelity and Capital is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity ClearPath 2045 and Capital Group Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Global and Fidelity ClearPath 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 ClearPath 2045 are associated (or correlated) with Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Global has no effect on the direction of Fidelity ClearPath i.e., Fidelity ClearPath and Capital Group go up and down completely randomly.

Pair Corralation between Fidelity ClearPath and Capital Group

Assuming the 90 days trading horizon Fidelity ClearPath is expected to generate 1.13 times less return on investment than Capital Group. But when comparing it to its historical volatility, Fidelity ClearPath 2045 is 1.2 times less risky than Capital Group. It trades about 0.21 of its potential returns per unit of risk. Capital Group Global is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  5,614  in Capital Group Global on September 3, 2024 and sell it today you would earn a total of  479.00  from holding Capital Group Global or generate 8.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.41%
Values	Daily Returns

Fidelity ClearPath 2045  vs.  Capital Group Global

Fidelity ClearPath 2045

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity ClearPath 2045 are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat unfluctuating basic indicators, Fidelity ClearPath may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Capital Group Global

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Group Global are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Capital Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fidelity ClearPath and Capital Group

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

The idea behind Fidelity ClearPath 2045 and Capital Group Global 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.