Correlation Between RBC Global and Fidelity Global

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

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

Diversification Opportunities for RBC Global and Fidelity Global

0.99

Correlation Coefficient

RBC Global  Fidelity Global

No risk reduction

The 3 months correlation between RBC and Fidelity is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding RBC Global Equity and Fidelity Global Innovators in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Global Inno and RBC 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 RBC Global Equity are associated (or correlated) with Fidelity Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Global Inno has no effect on the direction of RBC Global i.e., RBC Global and Fidelity Global go up and down completely randomly.

Pair Corralation between RBC Global and Fidelity Global

Assuming the 90 days trading horizon RBC Global is expected to generate 1.57 times less return on investment than Fidelity Global. But when comparing it to its historical volatility, RBC Global Equity is 1.21 times less risky than Fidelity Global. It trades about 0.23 of its potential returns per unit of risk. Fidelity Global Innovators is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  3,460  in Fidelity Global Innovators on September 3, 2024 and sell it today you would earn a total of  582.00  from holding Fidelity Global Innovators or generate 16.82% return on investment over 90 days.

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

RBC Global Equity  vs.  Fidelity Global Innovators

RBC Global Equity

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Global Equity are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, RBC Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fidelity Global Inno

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Global Innovators are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat unfluctuating basic indicators, Fidelity Global sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RBC Global and Fidelity Global

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

The idea behind RBC Global Equity and Fidelity Global Innovators 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.