Correlation Between Mawer Global and Fidelity Tactical

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

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

Diversification Opportunities for Mawer Global and Fidelity Tactical

-0.69

Correlation Coefficient

Mawer Global  Fidelity Tactical

Excellent diversification

The 3 months correlation between Mawer and Fidelity is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Mawer Global Small and Fidelity Tactical High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Tactical High and Mawer Global 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 Mawer Global Small are associated (or correlated) with Fidelity Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Tactical High has no effect on the direction of Mawer Global i.e., Mawer Global and Fidelity Tactical go up and down completely randomly.

Pair Corralation between Mawer Global and Fidelity Tactical

Assuming the 90 days trading horizon Mawer Global Small is expected to under-perform the Fidelity Tactical. In addition to that, Mawer Global is 1.36 times more volatile than Fidelity Tactical High. It trades about -0.08 of its total potential returns per unit of risk. Fidelity Tactical High is currently generating about 0.27 per unit of volatility. If you would invest  1,005  in Fidelity Tactical High on September 4, 2024 and sell it today you would earn a total of  101.00  from holding Fidelity Tactical High or generate 10.05% return on investment over 90 days.

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

Mawer Global Small  vs.  Fidelity Tactical High

Mawer Global Small

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fidelity Tactical High

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Tactical High are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of very fragile basic indicators, Fidelity Tactical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mawer Global and Fidelity Tactical

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

The idea behind Mawer Global Small and Fidelity Tactical 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.