Correlation Between Evolve Cryptocurrencies and Fidelity Advantage

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

By analyzing existing cross correlation between Evolve Cryptocurrencies ETF and Fidelity Advantage Ether, you can compare the effects of market volatilities on Evolve Cryptocurrencies and Fidelity Advantage 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 Evolve Cryptocurrencies with a short position of Fidelity Advantage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolve Cryptocurrencies and Fidelity Advantage.

Diversification Opportunities for Evolve Cryptocurrencies and Fidelity Advantage

0.97

Correlation Coefficient

Evolve Cryptocurrencies  Fidelity Advantage

Almost no diversification

The 3 months correlation between Evolve and Fidelity is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Evolve Cryptocurrencies ETF and Fidelity Advantage Ether in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advantage Ether and Evolve Cryptocurrencies 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 Evolve Cryptocurrencies ETF are associated (or correlated) with Fidelity Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advantage Ether has no effect on the direction of Evolve Cryptocurrencies i.e., Evolve Cryptocurrencies and Fidelity Advantage go up and down completely randomly.

Pair Corralation between Evolve Cryptocurrencies and Fidelity Advantage

Assuming the 90 days trading horizon Evolve Cryptocurrencies is expected to generate 1.67 times less return on investment than Fidelity Advantage. But when comparing it to its historical volatility, Evolve Cryptocurrencies ETF is 1.44 times less risky than Fidelity Advantage. It trades about 0.23 of its potential returns per unit of risk. Fidelity Advantage Ether is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  5,944  in Fidelity Advantage Ether on September 17, 2024 and sell it today you would earn a total of  1,558  from holding Fidelity Advantage Ether or generate 26.21% return on investment over 90 days.

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

Evolve Cryptocurrencies ETF  vs.  Fidelity Advantage Ether

Evolve Cryptocurrencies

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve Cryptocurrencies ETF are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Evolve Cryptocurrencies displayed solid returns over the last few months and may actually be approaching a breakup point.

Fidelity Advantage Ether

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advantage Ether are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Fidelity Advantage displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evolve Cryptocurrencies and Fidelity Advantage

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

The idea behind Evolve Cryptocurrencies ETF and Fidelity Advantage Ether 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.