Correlation Between Fidelity International and International Small

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

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

Diversification Opportunities for Fidelity International and International Small

0.95

Correlation Coefficient

Fidelity International  International Small

Almost no diversification

The 3 months correlation between Fidelity and International is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity International Small and International Small Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Small Pany and Fidelity International 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 International Small are associated (or correlated) with International Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Small Pany has no effect on the direction of Fidelity International i.e., Fidelity International and International Small go up and down completely randomly.

Pair Corralation between Fidelity International and International Small

Assuming the 90 days horizon Fidelity International Small is expected to under-perform the International Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Fidelity International Small is 1.21 times less risky than International Small. The mutual fund trades about -0.11 of its potential returns per unit of risk. The International Small Pany is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  2,042  in International Small Pany on August 31, 2024 and sell it today you would lose (51.00) from holding International Small Pany or give up 2.5% of portfolio value over 90 days.

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

Fidelity International Small  vs.  International Small Pany

Fidelity International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity International Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Fidelity International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

International Small Pany

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Small Pany has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, International Small 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 International and International Small

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

The idea behind Fidelity International Small and International Small Pany 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.