Correlation Between Emerging Markets and Fidelity Series
Can any of the company-specific risk be diversified away by investing in both Emerging Markets and Fidelity Series 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 Emerging Markets and Fidelity Series into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerging Markets Fund and Fidelity Series Emerging, you can compare the effects of market volatilities on Emerging Markets and Fidelity Series 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 Emerging Markets with a short position of Fidelity Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Fidelity Series.
Diversification Opportunities for Emerging Markets and Fidelity Series
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Emerging and Fidelity is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Markets Fund and Fidelity Series Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Series Emerging and Emerging Markets 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 Emerging Markets Fund are associated (or correlated) with Fidelity Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Series Emerging has no effect on the direction of Emerging Markets i.e., Emerging Markets and Fidelity Series go up and down completely randomly.
Pair Corralation between Emerging Markets and Fidelity Series
Assuming the 90 days horizon Emerging Markets Fund is expected to generate 0.95 times more return on investment than Fidelity Series. However, Emerging Markets Fund is 1.06 times less risky than Fidelity Series. It trades about 0.11 of its potential returns per unit of risk. Fidelity Series Emerging is currently generating about 0.09 per unit of risk. If you would invest 1,452 in Emerging Markets Fund on January 19, 2024 and sell it today you would earn a total of 74.00 from holding Emerging Markets Fund or generate 5.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerging Markets Fund vs. Fidelity Series Emerging
Performance |
| Timeline |
| Emerging Markets |
| Fidelity Series Emerging |
Emerging Markets and Fidelity Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerging Markets and Fidelity Series
The main advantage of trading using opposite Emerging Markets and Fidelity Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets position performs unexpectedly, Fidelity Series 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 Series will offset losses from the drop in Fidelity Series' long position.| Emerging Markets vs. Vanguard Emerging Markets | Emerging Markets vs. Vanguard Emerging Markets | Emerging Markets vs. American Funds New | Emerging Markets vs. American Funds New |
| Fidelity Series vs. Vanguard Emerging Markets | Fidelity Series vs. Vanguard Emerging Markets | Fidelity Series vs. American Funds New | Fidelity Series vs. American Funds New |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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