Correlation Between Fidelity Advantage and BetaPro Inverse

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

By analyzing existing cross correlation between Fidelity Advantage Bitcoin and BetaPro Inverse Bitcoin, you can compare the effects of market volatilities on Fidelity Advantage and BetaPro Inverse 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 Advantage with a short position of BetaPro Inverse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Advantage and BetaPro Inverse.

Diversification Opportunities for Fidelity Advantage and BetaPro Inverse

-0.7

Correlation Coefficient

Fidelity Advantage  BetaPro Inverse

Excellent diversification

The 3 months correlation between Fidelity and BetaPro is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Advantage Bitcoin and BetaPro Inverse Bitcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BetaPro Inverse Bitcoin and Fidelity Advantage 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 Advantage Bitcoin are associated (or correlated) with BetaPro Inverse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BetaPro Inverse Bitcoin has no effect on the direction of Fidelity Advantage i.e., Fidelity Advantage and BetaPro Inverse go up and down completely randomly.

Pair Corralation between Fidelity Advantage and BetaPro Inverse

Assuming the 90 days trading horizon Fidelity Advantage Bitcoin is expected to generate 0.92 times more return on investment than BetaPro Inverse. However, Fidelity Advantage Bitcoin is 1.09 times less risky than BetaPro Inverse. It trades about 0.23 of its potential returns per unit of risk. BetaPro Inverse Bitcoin is currently generating about -0.17 per unit of risk. If you would invest  3,541  in Fidelity Advantage Bitcoin on October 9, 2024 and sell it today you would earn a total of  1,307  from holding Fidelity Advantage Bitcoin or generate 36.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.5%
Values	Daily Returns

Fidelity Advantage Bitcoin  vs.  BetaPro Inverse Bitcoin

Fidelity Advantage

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advantage Bitcoin are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Fidelity Advantage displayed solid returns over the last few months and may actually be approaching a breakup point.

BetaPro Inverse Bitcoin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BetaPro Inverse Bitcoin has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Pair Trading with Fidelity Advantage and BetaPro Inverse

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

The idea behind Fidelity Advantage Bitcoin and BetaPro Inverse Bitcoin 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.