Correlation Between Fidelity Advisor and Century Small

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

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

Diversification Opportunities for Fidelity Advisor and Century Small

0.94

Correlation Coefficient

Fidelity Advisor  Century Small

Almost no diversification

The 3 months correlation between Fidelity and CENTURY is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Financial and Century Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Small Cap 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 Financial are associated (or correlated) with Century Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Small Cap has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Century Small go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Century Small

Assuming the 90 days horizon Fidelity Advisor is expected to generate 1.47 times less return on investment than Century Small. In addition to that, Fidelity Advisor is 1.17 times more volatile than Century Small Cap. It trades about 0.06 of its total potential returns per unit of risk. Century Small Cap is currently generating about 0.1 per unit of volatility. If you would invest  3,913  in Century Small Cap on October 22, 2024 and sell it today you would earn a total of  269.00  from holding Century Small Cap or generate 6.87% return on investment over 90 days.

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

Fidelity Advisor Financial  vs.  Century Small Cap

Fidelity Advisor Fin

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Financial are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Fidelity Advisor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Century Small Cap

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Century Small Cap are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Century Small may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Fidelity Advisor and Century Small

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

The idea behind Fidelity Advisor Financial and Century Small Cap 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.