Correlation Between Fidelity Capital and Fidelity Advisor

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

Diversification Opportunities for Fidelity Capital and Fidelity Advisor

0.34

Correlation Coefficient

Fidelity Capital  Fidelity Advisor

Weak diversification

The 3 months correlation between Fidelity and Fidelity is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Capital Income and Fidelity Advisor Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Sem and Fidelity Capital 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 Capital Income 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 Sem has no effect on the direction of Fidelity Capital i.e., Fidelity Capital and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Fidelity Capital and Fidelity Advisor

Assuming the 90 days horizon Fidelity Capital is expected to generate 2.6 times less return on investment than Fidelity Advisor. But when comparing it to its historical volatility, Fidelity Capital Income is 7.13 times less risky than Fidelity Advisor. It trades about 0.06 of its potential returns per unit of risk. Fidelity Advisor Semiconductors is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  7,819  in Fidelity Advisor Semiconductors on September 28, 2024 and sell it today you would earn a total of  124.00  from holding Fidelity Advisor Semiconductors or generate 1.59% return on investment over 90 days.

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

Fidelity Capital Income  vs.  Fidelity Advisor Semiconductor

Fidelity Capital Income

Risk-Adjusted Performance

4 of 100

Insignificant

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

Fidelity Advisor Sem

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Semiconductors are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Advisor 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 Capital and Fidelity Advisor

The main advantage of trading using opposite Fidelity Capital and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Capital 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 Capital Income and Fidelity Advisor Semiconductors 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.