Correlation Between Fidelity Value and Desjardins

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

By analyzing existing cross correlation between Fidelity Value ETF and Desjardins RI Canada, you can compare the effects of market volatilities on Fidelity Value and Desjardins 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 Value with a short position of Desjardins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Value and Desjardins.

Diversification Opportunities for Fidelity Value and Desjardins

0.83

Correlation Coefficient

Fidelity Value  Desjardins

Very poor diversification

The 3 months correlation between Fidelity and Desjardins is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Value ETF and Desjardins RI Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desjardins RI Canada and Fidelity Value 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 Value ETF are associated (or correlated) with Desjardins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desjardins RI Canada has no effect on the direction of Fidelity Value i.e., Fidelity Value and Desjardins go up and down completely randomly.

Pair Corralation between Fidelity Value and Desjardins

Assuming the 90 days trading horizon Fidelity Value is expected to generate 1.44 times less return on investment than Desjardins. In addition to that, Fidelity Value is 2.36 times more volatile than Desjardins RI Canada. It trades about 0.13 of its total potential returns per unit of risk. Desjardins RI Canada is currently generating about 0.46 per unit of volatility. If you would invest  3,189  in Desjardins RI Canada on April 25, 2025 and sell it today you would earn a total of  373.00  from holding Desjardins RI Canada or generate 11.7% return on investment over 90 days.

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

Fidelity Value ETF  vs.  Desjardins RI Canada

Fidelity Value ETF

Risk-Adjusted Performance

OK

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

Desjardins RI Canada

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Desjardins RI Canada are ranked lower than 36 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Desjardins may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Fidelity Value and Desjardins

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

The idea behind Fidelity Value ETF and Desjardins RI Canada 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.