Correlation Between Fidelity Magellan and Pax Msci

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

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

Diversification Opportunities for Fidelity Magellan and Pax Msci

-0.53

Correlation Coefficient

Fidelity Magellan  Pax Msci

Excellent diversification

The 3 months correlation between Fidelity and Pax is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Magellan Fund and Pax Msci Eafe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax Msci Eafe and Fidelity Magellan 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 Magellan Fund are associated (or correlated) with Pax Msci. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax Msci Eafe has no effect on the direction of Fidelity Magellan i.e., Fidelity Magellan and Pax Msci go up and down completely randomly.

Pair Corralation between Fidelity Magellan and Pax Msci

Assuming the 90 days horizon Fidelity Magellan Fund is expected to generate 1.06 times more return on investment than Pax Msci. However, Fidelity Magellan is 1.06 times more volatile than Pax Msci Eafe. It trades about 0.18 of its potential returns per unit of risk. Pax Msci Eafe is currently generating about -0.05 per unit of risk. If you would invest  1,432  in Fidelity Magellan Fund on September 5, 2024 and sell it today you would earn a total of  150.00  from holding Fidelity Magellan Fund or generate 10.47% return on investment over 90 days.

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

Fidelity Magellan Fund  vs.  Pax Msci Eafe

Fidelity Magellan

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Magellan Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Fidelity Magellan may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pax Msci Eafe

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Fidelity Magellan Fund and Pax Msci Eafe 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.