Correlation Between Strategic Advisers and Fidelity Infrastructure

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

By analyzing existing cross correlation between Strategic Advisers Small Mid and Fidelity Infrastructure, you can compare the effects of market volatilities on Strategic Advisers and Fidelity Infrastructure 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 Strategic Advisers with a short position of Fidelity Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Advisers and Fidelity Infrastructure.

Diversification Opportunities for Strategic Advisers and Fidelity Infrastructure

0.68

Correlation Coefficient

Strategic Advisers  Fidelity Infrastructure

Poor diversification

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

Pair Corralation between Strategic Advisers and Fidelity Infrastructure

Assuming the 90 days horizon Strategic Advisers Small Mid is expected to under-perform the Fidelity Infrastructure. In addition to that, Strategic Advisers is 1.16 times more volatile than Fidelity Infrastructure. It trades about -0.35 of its total potential returns per unit of risk. Fidelity Infrastructure is currently generating about -0.08 per unit of volatility. If you would invest  1,411  in Fidelity Infrastructure on October 11, 2024 and sell it today you would lose (21.00) from holding Fidelity Infrastructure or give up 1.49% of portfolio value over 90 days.

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

Strategic Advisers Small Mid  vs.  Fidelity Infrastructure

Strategic Advisers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Strategic Advisers Small Mid has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Strategic Advisers is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Infrastructure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fidelity Infrastructure has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Fidelity Infrastructure is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Strategic Advisers and Fidelity Infrastructure

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

The idea behind Strategic Advisers Small Mid and Fidelity Infrastructure 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.