Correlation Between Fidelity Pacific and Fidelity Canada

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

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

Diversification Opportunities for Fidelity Pacific and Fidelity Canada

0.58

Correlation Coefficient

Fidelity Pacific  Fidelity Canada

Very weak diversification

The 3 months correlation between Fidelity and Fidelity is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Pacific Basin and Fidelity Canada Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Canada and Fidelity Pacific 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 Pacific Basin are associated (or correlated) with Fidelity Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Canada has no effect on the direction of Fidelity Pacific i.e., Fidelity Pacific and Fidelity Canada go up and down completely randomly.

Pair Corralation between Fidelity Pacific and Fidelity Canada

Assuming the 90 days horizon Fidelity Pacific Basin is expected to generate 1.02 times more return on investment than Fidelity Canada. However, Fidelity Pacific is 1.02 times more volatile than Fidelity Canada Fund. It trades about -0.17 of its potential returns per unit of risk. Fidelity Canada Fund is currently generating about -0.31 per unit of risk. If you would invest  3,293  in Fidelity Pacific Basin on September 26, 2024 and sell it today you would lose (205.00) from holding Fidelity Pacific Basin or give up 6.23% of portfolio value over 90 days.

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

Fidelity Pacific Basin  vs.  Fidelity Canada Fund

Fidelity Pacific Basin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Pacific Basin has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Fidelity Canada

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Canada Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Fidelity Pacific and Fidelity Canada

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

The idea behind Fidelity Pacific Basin and Fidelity Canada Fund 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..