Correlation Between New World and Fidelity Sustainable

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

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

Diversification Opportunities for New World and Fidelity Sustainable

0.98

Correlation Coefficient

New World  Fidelity Sustainable

Almost no diversification

The 3 months correlation between New and Fidelity is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding New World Fund and Fidelity Sustainable Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Sustainable and New World 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 New World Fund are associated (or correlated) with Fidelity Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Sustainable has no effect on the direction of New World i.e., New World and Fidelity Sustainable go up and down completely randomly.

Pair Corralation between New World and Fidelity Sustainable

Assuming the 90 days horizon New World is expected to generate 1.19 times less return on investment than Fidelity Sustainable. But when comparing it to its historical volatility, New World Fund is 1.17 times less risky than Fidelity Sustainable. It trades about 0.18 of its potential returns per unit of risk. Fidelity Sustainable Emerging is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  937.00  in Fidelity Sustainable Emerging on May 6, 2025 and sell it today you would earn a total of  80.00  from holding Fidelity Sustainable Emerging or generate 8.54% return on investment over 90 days.

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

New World Fund  vs.  Fidelity Sustainable Emerging

New World Fund

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in New World Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, New World may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Fidelity Sustainable

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Sustainable Emerging are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking indicators, Fidelity Sustainable may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with New World and Fidelity Sustainable

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

The idea behind New World Fund and Fidelity Sustainable Emerging 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 Stocks Directory module to find actively traded stocks across global markets.