Correlation Between Omni Small and Fidelity Advisor

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

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

Diversification Opportunities for Omni Small and Fidelity Advisor

0.52

Correlation Coefficient

Omni Small  Fidelity Advisor

Very weak diversification

The 3 months correlation between Omni and Fidelity is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Omni Small Cap Value and Fidelity Advisor Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Energy and Omni Small 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 Omni Small Cap Value are associated (or correlated) with Fidelity Advisor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advisor Energy has no effect on the direction of Omni Small i.e., Omni Small and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Omni Small and Fidelity Advisor

Assuming the 90 days horizon Omni Small Cap Value is expected to under-perform the Fidelity Advisor. But the mutual fund apears to be less risky and, when comparing its historical volatility, Omni Small Cap Value is 1.19 times less risky than Fidelity Advisor. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Fidelity Advisor Energy is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,862  in Fidelity Advisor Energy on December 20, 2024 and sell it today you would earn a total of  299.00  from holding Fidelity Advisor Energy or generate 7.74% return on investment over 90 days.

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

Omni Small Cap Value  vs.  Fidelity Advisor Energy

Omni Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Omni Small Cap Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Fidelity Advisor Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Energy are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Fidelity Advisor may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Omni Small and Fidelity Advisor

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

The idea behind Omni Small Cap Value and Fidelity Advisor Energy 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.