Correlation Between Fidelity Mid and Causeway Emerging

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

By analyzing existing cross correlation between Fidelity Mid Cap and Causeway Emerging Markets, you can compare the effects of market volatilities on Fidelity Mid and Causeway Emerging 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 Mid with a short position of Causeway Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Mid and Causeway Emerging.

Diversification Opportunities for Fidelity Mid and Causeway Emerging

0.95

Correlation Coefficient

Fidelity Mid  Causeway Emerging

Almost no diversification

The 3 months correlation between Fidelity and Causeway is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Mid Cap and Causeway Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Causeway Emerging Markets and Fidelity Mid 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 Mid Cap are associated (or correlated) with Causeway Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Causeway Emerging Markets has no effect on the direction of Fidelity Mid i.e., Fidelity Mid and Causeway Emerging go up and down completely randomly.

Pair Corralation between Fidelity Mid and Causeway Emerging

Assuming the 90 days horizon Fidelity Mid is expected to generate 1.68 times less return on investment than Causeway Emerging. In addition to that, Fidelity Mid is 1.06 times more volatile than Causeway Emerging Markets. It trades about 0.15 of its total potential returns per unit of risk. Causeway Emerging Markets is currently generating about 0.27 per unit of volatility. If you would invest  1,132  in Causeway Emerging Markets on May 3, 2025 and sell it today you would earn a total of  161.00  from holding Causeway Emerging Markets or generate 14.22% return on investment over 90 days.

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

Fidelity Mid Cap  vs.  Causeway Emerging Markets

Fidelity Mid Cap

Risk-Adjusted Performance

Good

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

Causeway Emerging Markets

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Causeway Emerging Markets are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Causeway Emerging showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidelity Mid and Causeway Emerging

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

The idea behind Fidelity Mid Cap and Causeway Emerging Markets 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.