Correlation Between Fidelity Advisor and Fidelity Capital

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

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

Diversification Opportunities for Fidelity Advisor and Fidelity Capital

-0.37

Correlation Coefficient

Fidelity Advisor  Fidelity Capital

Very good diversification

The 3 months correlation between Fidelity and Fidelity is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Growth and Fidelity Capital Appreciation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Capital App and Fidelity Advisor 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 Fidelity Advisor Growth are associated (or correlated) with Fidelity Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Capital App has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Fidelity Capital go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Fidelity Capital

Assuming the 90 days horizon Fidelity Advisor Growth is expected to generate 0.94 times more return on investment than Fidelity Capital. However, Fidelity Advisor Growth is 1.06 times less risky than Fidelity Capital. It trades about 0.09 of its potential returns per unit of risk. Fidelity Capital Appreciation is currently generating about 0.01 per unit of risk. If you would invest  11,382  in Fidelity Advisor Growth on October 22, 2024 and sell it today you would earn a total of  3,224  from holding Fidelity Advisor Growth or generate 28.33% return on investment over 90 days.

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

Fidelity Advisor Growth  vs.  Fidelity Capital Appreciation

Fidelity Advisor Growth

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Growth are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Fidelity Advisor may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Fidelity Capital App

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Capital Appreciation 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 basic 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.

Pair Trading with Fidelity Advisor and Fidelity Capital

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

The idea behind Fidelity Advisor Growth and Fidelity Capital Appreciation 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.