Correlation Between Fidelity Advisor and Fidelity Investment

Can any of the company-specific risk be diversified away by investing in both Fidelity Advisor and Fidelity Investment 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 Investment 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 Investment Grade, you can compare the effects of market volatilities on Fidelity Advisor and Fidelity Investment 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 Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Advisor and Fidelity Investment.

Diversification Opportunities for Fidelity Advisor and Fidelity Investment

-0.68

Correlation Coefficient

Fidelity Advisor  Fidelity Investment

Excellent diversification

The 3 months correlation between Fidelity and Fidelity is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Growth and Fidelity Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Investment Grade 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 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Investment Grade has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Fidelity Investment go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Fidelity Investment

Assuming the 90 days horizon Fidelity Advisor Growth is expected to under-perform the Fidelity Investment. In addition to that, Fidelity Advisor is 5.58 times more volatile than Fidelity Investment Grade. It trades about -0.1 of its total potential returns per unit of risk. Fidelity Investment Grade is currently generating about 0.13 per unit of volatility. If you would invest  702.00  in Fidelity Investment Grade on December 30, 2024 and sell it today you would earn a total of  18.00  from holding Fidelity Investment Grade or generate 2.56% return on investment over 90 days.

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

Fidelity Advisor Growth  vs.  Fidelity Investment Grade

Fidelity Advisor Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fidelity Advisor Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Fidelity Investment Grade

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Investment Grade are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Fidelity Investment 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 Fidelity Investment

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

The idea behind Fidelity Advisor Growth and Fidelity Investment Grade 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.