Correlation Between First Trust and Fidelity International

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

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

Diversification Opportunities for First Trust and Fidelity International

0.69

Correlation Coefficient

First Trust  Fidelity International

Poor diversification

The 3 months correlation between First and Fidelity is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Japan and Fidelity International Multifa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity International and First Trust 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 First Trust Japan 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 First Trust i.e., First Trust and Fidelity International go up and down completely randomly.

Pair Corralation between First Trust and Fidelity International

Considering the 90-day investment horizon First Trust Japan is expected to generate 1.52 times more return on investment than Fidelity International. However, First Trust is 1.52 times more volatile than Fidelity International Multifactor. It trades about 0.1 of its potential returns per unit of risk. Fidelity International Multifactor is currently generating about 0.08 per unit of risk. If you would invest  6,493  in First Trust Japan on August 17, 2025 and sell it today you would earn a total of  334.00  from holding First Trust Japan or generate 5.14% return on investment over 90 days.

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

First Trust Japan  vs.  Fidelity International Multifa

First Trust Japan

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Japan are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward-looking indicators, First Trust is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Fidelity International

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity International Multifactor are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical and fundamental indicators, Fidelity International is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with First Trust and Fidelity International

The main advantage of trading using opposite First Trust and Fidelity International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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 First Trust Japan and Fidelity International Multifactor 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.