Correlation Between Barloworld and Fidelity Advisor

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Can any of the company-specific risk be diversified away by investing in both Barloworld 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 Barloworld and Fidelity Advisor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barloworld Ltd ADR and Fidelity Advisor Gold, you can compare the effects of market volatilities on Barloworld 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 Barloworld with a short position of Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Fidelity Advisor.

Diversification Opportunities for Barloworld and Fidelity Advisor

-0.38
  Correlation Coefficient

Very good diversification

The 3 months correlation between Barloworld and Fidelity is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Fidelity Advisor Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Gold and Barloworld 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 Barloworld Ltd ADR 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 Gold has no effect on the direction of Barloworld i.e., Barloworld and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Barloworld and Fidelity Advisor

Assuming the 90 days horizon Barloworld Ltd ADR is expected to under-perform the Fidelity Advisor. In addition to that, Barloworld is 2.24 times more volatile than Fidelity Advisor Gold. It trades about -0.02 of its total potential returns per unit of risk. Fidelity Advisor Gold is currently generating about -0.01 per unit of volatility. If you would invest  2,804  in Fidelity Advisor Gold on September 12, 2024 and sell it today you would lose (43.00) from holding Fidelity Advisor Gold or give up 1.53% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Barloworld Ltd ADR  vs.  Fidelity Advisor Gold

 Performance 
       Timeline  
Barloworld ADR 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Barloworld Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Barloworld is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Fidelity Advisor Gold 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Weak
Over the last 90 days Fidelity Advisor Gold has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Fidelity Advisor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Barloworld and Fidelity Advisor Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Barloworld and Fidelity Advisor

The main advantage of trading using opposite Barloworld and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld 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 Barloworld Ltd ADR and Fidelity Advisor Gold 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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