Correlation Between Fidelity Stock and Fidelity Advisor

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

Diversification Opportunities for Fidelity Stock and Fidelity Advisor

0.96

Correlation Coefficient

Fidelity Stock  Fidelity Advisor

Almost no diversification

The 3 months correlation between Fidelity and Fidelity is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Stock Selector and Fidelity Advisor Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Large and Fidelity Stock 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 Stock Selector 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 Large has no effect on the direction of Fidelity Stock i.e., Fidelity Stock and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Fidelity Stock and Fidelity Advisor

Assuming the 90 days horizon Fidelity Stock Selector is expected to generate 1.1 times more return on investment than Fidelity Advisor. However, Fidelity Stock is 1.1 times more volatile than Fidelity Advisor Large. It trades about 0.11 of its potential returns per unit of risk. Fidelity Advisor Large is currently generating about 0.09 per unit of risk. If you would invest  8,187  in Fidelity Stock Selector on September 26, 2024 and sell it today you would earn a total of  463.00  from holding Fidelity Stock Selector or generate 5.66% return on investment over 90 days.

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

Fidelity Stock Selector  vs.  Fidelity Advisor Large

Fidelity Stock Selector

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Stock Selector are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Stock is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fidelity Advisor Large

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Large are ranked lower than 7 (%) 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.

Pair Trading with Fidelity Stock and Fidelity Advisor

The main advantage of trading using opposite Fidelity Stock and Fidelity Advisor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Stock 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 Stock Selector and Fidelity Advisor Large 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.