Correlation Between Fidelity International and First Trust

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

By analyzing existing cross correlation between Fidelity International High and First Trust RBA, you can compare the effects of market volatilities on Fidelity International and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity International and First Trust.

Diversification Opportunities for Fidelity International and First Trust

0.69

Correlation Coefficient

Fidelity International  First Trust

Poor diversification

The 3 months correlation between Fidelity and First is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity International High and First Trust RBA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust RBA 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 High are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust RBA has no effect on the direction of Fidelity International i.e., Fidelity International and First Trust go up and down completely randomly.

Pair Corralation between Fidelity International and First Trust

Given the investment horizon of 90 days Fidelity International High is expected to generate 0.91 times more return on investment than First Trust. However, Fidelity International High is 1.1 times less risky than First Trust. It trades about 0.16 of its potential returns per unit of risk. First Trust RBA is currently generating about 0.13 per unit of risk. If you would invest  2,207  in Fidelity International High on April 30, 2025 and sell it today you would earn a total of  152.00  from holding Fidelity International High or generate 6.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Fidelity International High  vs.  First Trust RBA

Fidelity International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity International High are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Fidelity International may actually be approaching a critical reversion point that can send shares even higher in August 2025.

First Trust RBA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust RBA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting forward indicators, First Trust may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Fidelity International and First Trust

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

The idea behind Fidelity International High and First Trust RBA 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.