Correlation Between Champlain Small and Fidelity Advisor

Can any of the company-specific risk be diversified away by investing in both Champlain 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 Champlain 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 Champlain Small and Fidelity Advisor Freedom, you can compare the effects of market volatilities on Champlain 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 Champlain Small with a short position of Fidelity Advisor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champlain Small and Fidelity Advisor.

Diversification Opportunities for Champlain Small and Fidelity Advisor

0.44

Correlation Coefficient

Champlain Small  Fidelity Advisor

Very weak diversification

The 3 months correlation between Champlain and Fidelity is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Small and Fidelity Advisor Freedom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Freedom and Champlain 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 Champlain Small 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 Freedom has no effect on the direction of Champlain Small i.e., Champlain Small and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Champlain Small and Fidelity Advisor

Assuming the 90 days horizon Champlain Small is expected to under-perform the Fidelity Advisor. In addition to that, Champlain Small is 1.26 times more volatile than Fidelity Advisor Freedom. It trades about -0.1 of its total potential returns per unit of risk. Fidelity Advisor Freedom is currently generating about 0.02 per unit of volatility. If you would invest  1,475  in Fidelity Advisor Freedom on December 23, 2024 and sell it today you would earn a total of  15.00  from holding Fidelity Advisor Freedom or generate 1.02% return on investment over 90 days.

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

Champlain Small  vs.  Fidelity Advisor Freedom

Champlain Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Champlain Small 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 Freedom

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Freedom are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental 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 Champlain Small and Fidelity Advisor

The main advantage of trading using opposite Champlain Small and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champlain 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 Champlain Small and Fidelity Advisor Freedom 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.