Correlation Between Fidelity Japan and Domini Impact

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

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

Diversification Opportunities for Fidelity Japan and Domini Impact

0.94

Correlation Coefficient

Fidelity Japan  Domini Impact

Almost no diversification

The 3 months correlation between Fidelity and Domini is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Japan Fund and Domini Impact International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Domini Impact Intern and Fidelity Japan 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 Japan Fund are associated (or correlated) with Domini Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Domini Impact Intern has no effect on the direction of Fidelity Japan i.e., Fidelity Japan and Domini Impact go up and down completely randomly.

Pair Corralation between Fidelity Japan and Domini Impact

Assuming the 90 days horizon Fidelity Japan Fund is expected to generate 1.26 times more return on investment than Domini Impact. However, Fidelity Japan is 1.26 times more volatile than Domini Impact International. It trades about 0.15 of its potential returns per unit of risk. Domini Impact International is currently generating about 0.1 per unit of risk. If you would invest  1,728  in Fidelity Japan Fund on May 4, 2025 and sell it today you would earn a total of  169.00  from holding Fidelity Japan Fund or generate 9.78% return on investment over 90 days.

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

Fidelity Japan Fund  vs.  Domini Impact International

Fidelity Japan

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Japan Fund are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity Japan may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Domini Impact Intern

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Domini Impact International are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Domini Impact 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 Japan and Domini Impact

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

The idea behind Fidelity Japan Fund and Domini Impact International 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.