Correlation Between Fidelity Advisor and Leisure Portfolio

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

By analyzing existing cross correlation between Fidelity Advisor Sumer and Leisure Portfolio Leisure, you can compare the effects of market volatilities on Fidelity Advisor and Leisure Portfolio 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 Leisure Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Advisor and Leisure Portfolio.

Diversification Opportunities for Fidelity Advisor and Leisure Portfolio

0.56

Correlation Coefficient

Fidelity Advisor  Leisure Portfolio

Very weak diversification

The 3 months correlation between Fidelity and Leisure is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Sumer and Leisure Portfolio Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leisure Portfolio Leisure 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 Sumer are associated (or correlated) with Leisure Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leisure Portfolio Leisure has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Leisure Portfolio go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Leisure Portfolio

Assuming the 90 days horizon Fidelity Advisor Sumer is expected to under-perform the Leisure Portfolio. In addition to that, Fidelity Advisor is 1.21 times more volatile than Leisure Portfolio Leisure. It trades about -0.17 of its total potential returns per unit of risk. Leisure Portfolio Leisure is currently generating about -0.06 per unit of volatility. If you would invest  2,053  in Leisure Portfolio Leisure on December 30, 2024 and sell it today you would lose (95.00) from holding Leisure Portfolio Leisure or give up 4.63% of portfolio value over 90 days.

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

Fidelity Advisor Sumer  vs.  Leisure Portfolio Leisure

Fidelity Advisor Sumer

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Advisor Sumer 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 April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Leisure Portfolio Leisure

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Fidelity Advisor and Leisure Portfolio

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

The idea behind Fidelity Advisor Sumer and Leisure Portfolio Leisure 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.