Correlation Between Fidelity Advisor and Fidelity Select

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

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

Diversification Opportunities for Fidelity Advisor and Fidelity Select

0.92

Correlation Coefficient

Fidelity Advisor  Fidelity Select

Almost no diversification

The 3 months correlation between Fidelity and Fidelity is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advisor Energy and Fidelity Select Portfolios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Select Port 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 Energy are associated (or correlated) with Fidelity Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Select Port has no effect on the direction of Fidelity Advisor i.e., Fidelity Advisor and Fidelity Select go up and down completely randomly.

Pair Corralation between Fidelity Advisor and Fidelity Select

Assuming the 90 days horizon Fidelity Advisor is expected to generate 1.18 times less return on investment than Fidelity Select. In addition to that, Fidelity Advisor is 1.0 times more volatile than Fidelity Select Portfolios. It trades about 0.08 of its total potential returns per unit of risk. Fidelity Select Portfolios is currently generating about 0.1 per unit of volatility. If you would invest  5,582  in Fidelity Select Portfolios on December 25, 2024 and sell it today you would earn a total of  411.00  from holding Fidelity Select Portfolios or generate 7.36% 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 Energy  vs.  Fidelity Select Portfolios

Fidelity Advisor Energy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Energy are ranked lower than 6 (%) 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 April 2025.

Fidelity Select Port

Risk-Adjusted Performance

OK

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

Pair Trading with Fidelity Advisor and Fidelity Select

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

The idea behind Fidelity Advisor Energy and Fidelity Select Portfolios 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.