Correlation Between Investment and Fidelity Advisor

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

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

Diversification Opportunities for Investment and Fidelity Advisor

0.41

Correlation Coefficient

Investment  Fidelity Advisor

Very weak diversification

The 3 months correlation between Investment and Fidelity is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Investment Of America and Fidelity Advisor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Tec and Investment 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 Investment Of America 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 Tec has no effect on the direction of Investment i.e., Investment and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Investment and Fidelity Advisor

Assuming the 90 days horizon Investment is expected to generate 1.35 times less return on investment than Fidelity Advisor. But when comparing it to its historical volatility, Investment Of America is 1.66 times less risky than Fidelity Advisor. It trades about 0.08 of its potential returns per unit of risk. Fidelity Advisor Technology is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  10,730  in Fidelity Advisor Technology on October 5, 2024 and sell it today you would earn a total of  2,856  from holding Fidelity Advisor Technology or generate 26.62% return on investment over 90 days.

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

Investment Of America  vs.  Fidelity Advisor Technology

Investment Of America

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fidelity Advisor Tec

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Technology are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Fidelity Advisor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Investment and Fidelity Advisor

The main advantage of trading using opposite Investment and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment 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 Investment Of America and Fidelity Advisor Technology 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.