Correlation Between Fidelity Overseas and Fidelity International

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

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

Diversification Opportunities for Fidelity Overseas and Fidelity International

0.89

Correlation Coefficient

Fidelity Overseas  Fidelity International

Very poor diversification

The 3 months correlation between Fidelity and Fidelity is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Overseas Fund and Fidelity International Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity International and Fidelity Overseas 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 Overseas Fund are associated (or correlated) with Fidelity International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity International has no effect on the direction of Fidelity Overseas i.e., Fidelity Overseas and Fidelity International go up and down completely randomly.

Pair Corralation between Fidelity Overseas and Fidelity International

Assuming the 90 days horizon Fidelity Overseas Fund is expected to under-perform the Fidelity International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Fidelity Overseas Fund is 1.15 times less risky than Fidelity International. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Fidelity International Capital is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  3,007  in Fidelity International Capital on September 20, 2024 and sell it today you would lose (156.00) from holding Fidelity International Capital or give up 5.19% of portfolio value over 90 days.

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

Fidelity Overseas Fund  vs.  Fidelity International Capital

Fidelity Overseas

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fidelity International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity International Capital has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Fidelity International 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 Overseas and Fidelity International

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

The idea behind Fidelity Overseas Fund and Fidelity International Capital 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.