Correlation Between Shelton Emerging and Fidelity Advisor

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

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

Diversification Opportunities for Shelton Emerging and Fidelity Advisor

0.35

Correlation Coefficient

Shelton Emerging  Fidelity Advisor

Weak diversification

The 3 months correlation between Shelton and Fidelity is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Shelton Emerging Markets 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 Shelton Emerging 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 Shelton Emerging Markets 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 Shelton Emerging i.e., Shelton Emerging and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Shelton Emerging and Fidelity Advisor

Assuming the 90 days horizon Shelton Emerging is expected to generate 44.25 times less return on investment than Fidelity Advisor. But when comparing it to its historical volatility, Shelton Emerging Markets is 1.21 times less risky than Fidelity Advisor. It trades about 0.0 of its potential returns per unit of risk. Fidelity Advisor Energy is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4,391  in Fidelity Advisor Energy on October 6, 2024 and sell it today you would earn a total of  322.00  from holding Fidelity Advisor Energy or generate 7.33% return on investment over 90 days.

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

Shelton Emerging Markets  vs.  Fidelity Advisor Energy

Shelton Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shelton Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's essential indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Fidelity Advisor Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Advisor Energy 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.

Pair Trading with Shelton Emerging and Fidelity Advisor

The main advantage of trading using opposite Shelton Emerging and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shelton Emerging 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 Shelton Emerging Markets 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.