Correlation Between Fidelity Convertible and Fidelity Advisor

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

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

Diversification Opportunities for Fidelity Convertible and Fidelity Advisor

0.91

Correlation Coefficient

Fidelity Convertible  Fidelity Advisor

Almost no diversification

The 3 months correlation between Fidelity and Fidelity is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Vertible Securities and Fidelity Advisor New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor New and Fidelity Convertible 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 Vertible Securities 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 New has no effect on the direction of Fidelity Convertible i.e., Fidelity Convertible and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Fidelity Convertible and Fidelity Advisor

Assuming the 90 days horizon Fidelity Vertible Securities is expected to generate 0.73 times more return on investment than Fidelity Advisor. However, Fidelity Vertible Securities is 1.37 times less risky than Fidelity Advisor. It trades about 0.63 of its potential returns per unit of risk. Fidelity Advisor New is currently generating about 0.26 per unit of risk. If you would invest  3,486  in Fidelity Vertible Securities on September 1, 2024 and sell it today you would earn a total of  292.00  from holding Fidelity Vertible Securities or generate 8.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

Fidelity Vertible Securities  vs.  Fidelity Advisor New

Fidelity Convertible

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Vertible Securities are ranked lower than 30 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity Convertible showed solid returns over the last few months and may actually be approaching a breakup point.

Fidelity Advisor New

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor New are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Fidelity Advisor may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Fidelity Convertible and Fidelity Advisor

The main advantage of trading using opposite Fidelity Convertible and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Convertible 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 Fidelity Vertible Securities and Fidelity Advisor New 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.